Understanding the consumer – the key to sustained market

Transcription

Provisional key dates in the financial calendar
Contents
May 2, 2006
Accounts press conference, Nuremberg
February 28, 2007
Provisional result for financial year 20061)
May 2, 2006
Analysts’ conference, Frankfurt/Main
April 4, 2007
May 15, 2006
Quarterly report as of March 311)
April 4, 2007
June 29, 2006
Annual General Meeting, Fürth
May 15, 2007
August 14, 2006
Interim report as of June 301)
May 23, 2007
Annual General Meeting
4 The Supervisory Board
November 14, 2006
Quarterly report as of September 301)
August 14, 2007
8 To our shareholders and business associates
GfK. Growth from Knowledge
Understanding the consumer – the key to sustained market success
III Our corporate values
IV Mission statement
GfK Group 2005 in figures
1 Financial year 2005: an outstanding year in the company’s history
2 2005 at a glance
5 Report by the Supervisory Board
12 The Management Board
November 14, 2007
14 Corporate Governance
19 GfK shares
1) Publication is scheduled for before the start of the trading session
26 GfK Special:
28 Germany:
Caught between fear of the future and a sense of happiness
Acknowledgements
34 Western and Southern Europe:
Italy – bridging world cultural heritage and corporate globalization
Most of the above information is also available
on GfK’s website at www.gfk.com
Information regarding the GfK Group’s
commitment to the community is provided in
the form of a special issue of the company’s
publication, gfk insite, a copy of which is
available on request.
Publisher
GfK ag
Nordwestring 101
D-90319 Nuremberg
http://www.gfk.com
If you wish to order further copies of the
Annual Report and press releases or the
latest information about GfK studies and
companies, please contact:
Editorial support services:
Medienservice Peter Reichard, Ebersberg
Public Affairs and Communications
Dr. Ulrike Schöneberg
Tel. +49 (0) 911- 395-2645
Fax +49 (0) 911- 395-4041
public.affairs@gfk.com
For copies of interim reports and the latest
financial information about the GfK Group and
its subsidiaries, please contact:
Investor Relations
Bernhard Wolf
Tel. +49 (0) 911- 395-2012
Fax +49 (0) 911- 395-4075
bernhard.wolf@gfk.com
Design
Scheufele Kommunikationsagentur GmbH,
Frankfurt/Main
Photography
Annette Hornischer, Frankfurt/Main
We should like to thank the families and GfK
employees in Germany, the uk, Italy, Japan,
Russia and the usa who helped with the photos.
Lithography
607er Druckvorlagen, Darmstadt
Translation
ask Translation, London, www.translate.co.uk
Printing
Mediahaus Biering GmbH, Munich
This Annual Report is also available in German.
40 Northern Europe:
uk – black humor and living for the present
GfK Group: Annual Report 2005
The Annual Report 2005 was published in
German and English on May 2, 2005.
46 Central and Eastern Europe:
Russia – from socialist state to modern market economy
52 America:
usa – from freedom of choice to consumer enthusiasm
58 Asia and the Pacific:
Japan – an unusual blend of cultural tradition and economic power
Management report and financial statements of the GfK Group
65 Management report
98 Financial statements
102 Notes to the consolidated financial statements
143 Auditors’ report
Understanding the consumer –
the key to sustained market success
Additional information
146 Overview of years
150 Glossaries
V List of GfK company abbreviations used in the management report
VI Index
VII Financial calendar
VII Acknowledgements
VII
II
Contents
May 2, 2006
February 28, 2007
May 2, 2006
April 4, 2007
May 15, 2006
April 4, 2007
June 29, 2006
May 15, 2007
August 14, 2006
May 23, 2007
November 14, 2006
August 14, 2007
2 2005 at a glance
November 14, 2007
19 GfK shares
26 GfK Special:
28 Germany:
Acknowledgements
Publisher
GfK ag
Nordwestring 101
D-90319 Nuremberg
http://www.gfk.com
Tel. +49 (0) 911- 395-2645
Fax +49 (0) 911- 395-4041
Investor Relations
Bernhard Wolf
Tel. +49 (0) 911- 395-2012
Fax +49 (0) 911- 395-4075
Design
Frankfurt/Main
Photography
Lithography
Translation
Printing
40 Northern Europe:
52 America:
150 Glossaries
VI Index
VII
II
List of GfK company abbreviations
used in the management report and financial statements
Our corporate values
Mission Statement
Client-driven
Gf K. Growth from Knowledge
Our clients’ needs drive our business. We continuously seek to better understand our clients’
Companies need to make decisions. Knowledge is the basis for decision-making. Our business
needs, improve all aspects of existing research products, offer innovative products and to be
information services provide the essential knowledge that industry, retail, the service sector and the
an integral part of our clients’ information systems. Accuracy, sound methodology, excellent
media need in order to make their decisions.
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.
As a knowledge provider, we aim to be at the top in all the global markets in which we operate –
in the interests of our clients, our employees, our company, our shareholders and the general
are empowered to achieve our common goals. We encourage and reward initiative, dedication and
key to our success.
GfK Audits and Surveys, usa
asw Delaware, llc
GfK Group 2005 in figures 1)
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
Change
business activities. Clients’ needs, evolving markets, new technology and the expertise and ideas of
our people throughout the world are what drive innovation.
We respect and learn from local business practices and cultures and provide knowledge tailored to local
937.3
+ 40.1
ebitda
in eur m
107.8
153.5
+ 42.4
in eur m
82.9
125.1
+ 50.9
in %
12,4
13.3
–
2)
Margin3)
Operating income
in eur m
77.6
80.7
+ 3.9
Income from ongoing business activity
in eur m
81.4
92.2
+ 13.3
Consolidated total income
Tax ratio
Cash flow from operating activity
Earnings per share
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 nonfinancial 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.
in %
669.1
clients with consistent services. As proud members of the GfK Group, we share local and international
Growth
2005
in eur m
needs. Our global network comprises international teams, tools and products to provide multinational
expertise to continually improve all aspects of our business.
2004
Sales
Adjusted operating income
Global expertise – local knowledge
Beyen Marktforschung, usa
Beyen Corporation of America Inc.
GfK Asia, Singapore
GfK Asia Pte Ltd.
Innovation
Dividend per share
4)
in eur m
53.1
67.5
+ 27.1
in %
34.7
26.8
–
in eur m
92.1
128.9
+ 40.0
in eur
1.35
1.77
+ 31.1
in eur
0.30
0.33
+ 10.0
Total dividend
in eur m
9.4
11.6
+ 23.4
No. of employees at year-end
full-time
5,539
7,515
+ 35.7
1) Financial reporting in accordance with ifrs
2) Adjusted operating income is calculated from operating income. The following expenses and earnings have been eliminated:
integration costs arising in connection with the acquisition of companies, amortization on disclosed hidden reserves as
part of purchase price allocation, personnel expenses for share-based payments and long-term incentives, other operating
income and remaining other operating expenses including, in particular, currency effects resulting from the reporting date
valuation.
3) Adjusted operating income in relation to sales in %
4) Proposal to the Annual General Meeting on June, 29, 2006
GfK us Healthcare Companies
GfK u.s. Healthcare Companies lp
(formerly nop World Health l.p.)
Beyen Marktforschung, Germany
Beyen Marktforschung GmbH
GfK Arbor, usa
GfK arbor, llc
hard work. Fairness, good communication and working relationships at all levels and locations are
GfK Intomart, Netherlands
Intomart GfK Group b.v
GfK Market Measures, usa
GfK ag, Germany
GfK Aktiengesellschaft
is essential to our business. Our people have the freedom to explore and develop their talents and
GfK Sverige, Sweden
GfK Sverige Aktiebolag
GfK Latinoamerica Holding, Spain
GfK latinoamerica holding s. l.
Caribou Lake Software, usa
Caribou Lake Software, llc
People are our main asset. Development through training, sharing ideas and sound experience
GfK iha Italia, Italy
iha Italia S.p.A
Allison Fisher International, usa
GfK Automotive llc
(formerly Allison-Fisher International llc)
Beyen Marktforschung, Canada
Beyen Corp of Canada Inc.
public.
Our people
Adimark, Chile
Adimark s.a., Providencia, Adimark Investigaciones
de Mercado Ltda, Collect Investigaciones de Mercado
s.a., GeoAdimark s.a., Server s.a.
GfK Marketing Services Australia, Australia
GfK Marketing Services Australia Pty. Ltd.
GfK Marketing Services China, China
GfK Asia Pte. Ltd., Office Shanghai
GfK Marketing Services, Germany
GfK Marketing Services GmbH & Co. kg
Merc, Mexico
merc Analistas de Mercados s.a. de c.v.
merc Analistas de Mercados c.a.
GfK Custom Research Worldwide
GfK Custom Research worldwide gie
GfK Media, uk
GfK Media Ltd.
GfK cri, usa
GfK Custom Research Inc.
GfK Non-Food Tracking Holding, Germany
GfK Non-Food Tracking Holding GmbH
GfK cbi, Italy
GfK consumer and business information italy S.p.A
GfK nop, usa
GfK nop, llc (formerly Roperasw llc)
GfK Data Services, Germany
GfK Data Services GmbH, Nuremberg, Germany
GfK nop Custom Research, uk
GfK nop Limited, Custom Research
GfK Equity Research, usa
GfK Equity Research Inc.
GfK Panel Services, Germany
GfK Panelservices Deutschland GmbH
GfK Eurisko, Italy
GfK Eurisko S.r.l. (formerly Eurisko S.r.L.)
GfK Panel Services, Netherlands
GfK Panelservices Benelux b.v.
GfK Gral-Iteo, Slovenia
gfk gral-iteo tržne raziskave d.o.o., Ljubljana,
Slovenia
GfK Research Dynamics, Canada
GfK Research Dynamics, Inc.
GfK Group Services, Germany
GfK Aktiengesellschaft, GfK Group Services,
Nuremberg, Germany
135ff. Affiliated companies
56f., 79, 82, 149 America
62f., 79, 82, 149 Asia and the Pacific
73, 147 Assets
106f., 115 – intangible assets
72f., 99 Balance sheet
115 – Balance sheet, notes to the
72, 99, 147 – Total assets
69, 73, 99, 147 Borrowings
74ff., 94ff. Business Divisions
see also
Consumer Tracking, Custom Research,
HealthCare, Media,
Retail and Technology
69 Capital increase
Cash flow
100, 147 – from investing activity
IV, 73, 100, 147 – from operating activity
nop World
Core companies:
afi Holdings llc, usaafi Investments Ltd., uk
73, 93, 147 Free cash flow
73, 100 Cash flow statement
126 – Notes to the cash flow statement
134 – Transition ifrs
asw Delaware llc, usa
asw Investments, Inc., usa
50f., 79, 81, 149 Central and Eastern Europe
Barterstore Ltd., uk
Consolidated
97ff. – financial statements
IV, 71f., 98, 146 – total income
Dealtalk Ltd., uk
E. Friedman Marketing Services, Inc., usa
Consolidation
103f. – Methods of consolidation
109 – Scope of consolidation
GfK Automotive, llc, usa
GfK nop, llc, usa
GfK nop Field Interviewing Services Ltd., uk
103f., 109 Consumer Tracking
GfK nop Mystery Shopping Services Ltd., uk
127 Contingencies
GfK nop Services Ltd., uk
87, 93 Corporate Communications
GfK nop Telephone Interviewing Services Ltd., uk
14ff. Corporate Governance
74, 76, 89, 94, 149 Custom Research
Interactive Research Ltd, uk
79, 101, 104, Currency translation
mil Research Group Ltd, uk
113f. Deferred taxes
National Opinion Polls Ltd., uk
IV, 11, 23, 148 Dividend
nop Automotive, Inc., usa
71, 146 ebit
nop World Ltd., uk
IV, 71, 146 ebitda
Numbers Data Processing Ltd., uk
IV, 84ff., 134, 149 Employees
Numbers (Holdings) Ltd., uk
GfK Research Matters, Switzerland
See Research Matters
GfK rt Israel, Israel
GfK Retail & Technology Ltd., Ramat Gan, Israel
GfK HealthCare, Germany
GfK Aktiengesellschaft, HealthCare,
Nuremberg, Germany
GfK-Rus, Russia
GfK-rus Gesellschaft mbH
GfK HealthCare Asia, Singapore
GfK HealthCare Asia Pte Ltd.
GfK Strategic Marketing
Income
IV, 71f. 98, 146 – from ongoing business activity
– operating income
see Operating income
71f., 146 Income from participations
71, 98, 146 Income statement
112ff. – Notes to the income statement
25 Investor Relations
73, 93, 147 Investment
117f. Leases
12ff., 14, 86, 135, 137 Management Board
10, 84, 17, 105 Management Board remuneration
IV Margin
87, 93 Marketing
74, 77, 89, 94, 149 Media
Net income for the year
see Consolidated total income
111 Associated companies
iha ims health, Switzerland
iha·ims Health GmbH
GfK Marketing Services Thailand, Thailand
GfK Marketing Services (Thailand) Limited
GfK Martin Hamblin, uk
GfK Martin Hamblin Limited
GfK Martin Hamblin Inc (usa)
Adjused operating income
see income
gpi Kommunikationsforschung, Germany
gpi Kommunikationsforschung Gesellschaft für
Pharma-Informationssysteme mbH
Mediamark Research
Mediamark Research Inc.
GfK Business Solutions & Processing, Germany
GfK Data Services GmbH, GfK Business Solutions
& Processing
Ad Hoc Research
see Custom Research
GfK v2
GfK v2, llc, Blue Bell, Pennsylvania, usa
GfK Marketing Services Italia, Italy
GfK Marketing Services Italia S.r.l.
GfK Marktforschung, Germany
GfK Marktforschung GmbH
104ff. Accounting and valuation methods
1, 8, 69f., 71, 73, Acquisitions
78, 85, 91, 109f.
GfK us Holdings, Inc.
(formerly GfK Americas, Inc., prior to this
nop World Inc.)
KleimanSygnos, Argentina
Kleiman Sygnos Research s.a.
GfK Automotive, usa
GfK Automotive, llc
5 Star Initiative
– see Management Board
renumeration
see Strategy
GfK us Holding, usa
GfK Marketing Services, uk
GfK Marketing Services Ltd.
GfK Marketing Services Vietnam, Vietnam
GfK Asia Pte. Ltd., Office Vietnam
Index
86 Environmental protection
Numbers Market Research Ltd., uk
73, 99, 120, 147 Equity
73, 99 – Change in shareholders’ equity
73 – Equity ratio
Roperasw Europe Ltd., uk
Roper Starch Worldwide, llc, usa
73, 90, 93 Financing
Research Matters, Switzerland
Research Matters ag
107, 127 Financial instruments
118 Financial assets
125 Financial liabilities
107, 117 Fixed assets
74 Gearing
28ff., 32f., 79., 149 Germany
106, 116 Goodwill
74, 77, 89, 94, 149 HealthCare
72 Highlighted items
84f., 93 Human Resources
73, 147 Net indebtedness
1, 8, 69f., 75, 79, 85, nop World
93, 110
44f., 79, 81, 149 Northern Europe
Operating income
see Income
71, 72, 105 Operating profit
1, 75, 93f. Organic growth
86, 93 Organization and administration
148 Pay-out ratio
130 Pro forma statements (ifrs 3)
148 Profit to sales ratio
123 Proposed appropriation of profits
108, 123f., 125 Provisions
83 Purchasing
148 Ratio of net indebtedness to cash flow
24ff., 78f. Regions
see also America, Asia and the Pacific,
Germany, Northern Europe,
Western and Southern Europe,
Central and Eastern Europe
74, 76, 89, 94 Retail and Technology
Return
see Margin
148 Return on capital employed
83f., 93, 105 Research and development
88ff. Risk report
IV, 71, 93f., 98,112, Sales
146
74ff., 94ff., 128ff. Segment report
see also Business divisions, Regions
19ff., 69
IV, 21, 105, 115, 148
21, 148
19ff.
Shares
– Earnings per share
– Key indicators
– Share price performance
23 Shareholder structure
138ff. Shareholdings
74 Soft facts
Staff
see Employees
8, 70, 84 Strategy
86, 93 Sub-holdings
4ff., 15, 135f. Supervisory Board
Tax
see Tax on income and earnings
IV, 72, 105, 113f., Tax on income and earnings
146
130ff. Transition from us gaap to ifrs
38f., 79f., 149 Western and Southern Europe
IV, 71f., 93ff., 98, Income
112f., 146
III
IV
V
VI
Mission Statement
Client-driven
to their success.
key to our success.
asw Delaware, llc
Change
937.3
+ 40.1
ebitda
in eur m
107.8
153.5
+ 42.4
in eur m
82.9
125.1
+ 50.9
in %
12,4
13.3
–
2)
Margin3)
Operating income
in eur m
77.6
80.7
+ 3.9
in eur m
81.4
92.2
+ 13.3
Tax ratio
Earnings per share
in %
669.1
Growth
2005
in eur m
2004
Sales
GfK Asia, Singapore
GfK Asia Pte Ltd.
Innovation
Dividend per share
4)
in eur m
53.1
67.5
+ 27.1
in %
34.7
26.8
–
in eur m
92.1
128.9
+ 40.0
in eur
1.35
1.77
+ 31.1
in eur
0.30
0.33
+ 10.0
Total dividend
in eur m
9.4
11.6
+ 23.4
full-time
5,539
7,515
+ 35.7
valuation.
GfK Arbor, usa
GfK arbor, llc
GfK ag, Germany
GfK Sverige, Sweden
iha Italia S.p.A
GfK Automotive llc
public.
Our people
Adimark, Chile
Merc, Mexico
GfK Media, uk
GfK Media Ltd.
GfK cri, usa
GfK cbi, Italy
GfK nop, usa
GfK Eurisko, Italy
Slovenia
Nuremberg, Germany
56f., 79, 82, 149 America
73, 147 Assets
69, 73, 99, 147 Borrowings
see also
HealthCare, Media,
69 Capital increase
Cash flow
nop World
Core companies:
Consolidated
Dealtalk Ltd., uk
Consolidation
GfK nop, llc, usa
127 Contingencies
71, 146 ebit
nop World Ltd., uk
IV, 71, 146 ebitda
Nuremberg, Germany
GfK-Rus, Russia
Income
117f. Leases
IV Margin
87, 93 Marketing
74, 77, 89, 94, 149 Media
see income
Mediamark Research
& Processing
Ad Hoc Research
see Custom Research
GfK v2
78, 85, 91, 109f.
nop World Inc.)
GfK Automotive, usa
GfK Automotive, llc
5 Star Initiative
renumeration
see Strategy
GfK us Holding, usa
Index
73, 99, 120, 147 Equity
73 – Equity ratio
Research Matters ag
74 Gearing
28ff., 32f., 79., 149 Germany
106, 116 Goodwill
74, 77, 89, 94, 149 HealthCare
1, 8, 69f., 75, 79, 85, nop World
93, 110
Operating income
see Income
148 Pay-out ratio
83 Purchasing
24ff., 78f. Regions
Return
see Margin
88ff. Risk report
IV, 71, 93f., 98,112, Sales
146
19ff., 69
IV, 21, 105, 115, 148
21, 148
19ff.
Shares
– Key indicators
74 Soft facts
Staff
see Employees
8, 70, 84 Strategy
86, 93 Sub-holdings
Tax
146
112f., 146
III
IV
V
VI
GfK GROUP
Financial year 2005:
An outstanding year in the company’s history
Growth from Knowledge has attained a new dimension. With the acquisition of
nop World on April 15, we have re-defined our position in the premier league of
market research:
We have enhanced our opportunities in terms of expanding our corporate network
and services rapidly at global level and to a degree that would have been impossible
for GfK alone.
We have positioned ourselves well in the traditional marketing and market research
markets in the usa and Europe and the fast growing markets of Asia, Latin America
and Central and Eastern Europe, creating a strong basis for future growth.
We have improved our potential in terms of meeting the high requirements of our
clients with efficient cutting edge metering and analysis instruments that can be
used internationally. We help clients to arrive at innovative solutions in their marketing
decision-making by providing up-to-the-minute market and consumer analysis.
We have taken this opportunity to define our strategic aims for the coming years in
our 5 Star Initiative which covers five milestones: Fact-based Consultancy, top 3,
Global Reach, Full Service and Excellent Financials.
In financial terms, 2005 was also the most successful year in the company’s history.
Together with the former nop World companies consolidated since June 1, 2005,
we achieved sales in excess of 937 million euros. This represents growth of 40 %.
At more than 125 million euros, income was up by over 50 %. We also increased
our margin from 12.4% to 13.3%. With organic growth of 6.5 %, we outperformed
sector growth once again.
Our work and success have always been driven by supplying clients with the essential
knowledge they need about markets and consumers.
We supply this knowledge because we know that
understanding consumers, their requirements and attitudes are key
to the sustained success of our clients in their markets.
GfK_1
2005 at a glance
January
vÊÀÕ««i
GfK Belgrade is awarded the
prize for best business partner by
The Coca-Cola Company.
v°Ê
À«À>ÌiÊ>>}iiÌÊ*ÀV«iÃ
The stake in us e-commerce and database marketing specialist, Caribou
Lake Software, increases to 69.8%.
Dr. Richard B. Vanderveer, ceo of
GfK v2 in Pennsylvania, is voted
“Executive of the Year” by trade
magazine, The Pharmaceutical
Market Research Report.
February
GfK Praha and GfK Slovakia receive
the Golden Ducat Award at the Czech
Retail Summit for their outstanding
contribution to the sector.
Employees, managers and associates
of GfK join together to donate a total
of 300,000 euros towards building a
hospital in memory of the late Management Board member, Heinrich a.
Litzenroth.
Establishment of GfK Bulgaria’s data
production center, which provides
production services to GfK companies
operating in the Custom Research
division.
Launch of “InterAct!”, an international
exchange program for GfK employees.
GfK’s most significant acquisition to
date is nop World with operations in
the usa, uk and Italy.
Majority acquisition of the custom
research service,
GfK Research Dynamics in Canada.
Majority acquisition of Adimark,
Chile’s No. 1 custom research
company.
Data collection of multimedia equipment in 22,000 French households
carried out by GfK and associate,
Médiamétrie.
Following the approval of the
acquisition of nop World by the
cartel authorities in Germany and
the usa, 3.1 million GfK shares are
placed with institutional investors.
Increase of stake in GfK v2 to
100 %. Pooling of HealthCare
activities in the usa under the name
GfK us HealthCare Companies.
March
April
May
June
Acquisition of 33 % of the shares
in Swiss pharmaceutical research
company, Research Matters.
2_GfK
GfK’s “Growth from Knowledge”
campaign receives BoB Best of
Business to Business Communication
Award from the German trade press
and Association of Communications.
Stock exchange award for GfK
Investor Relations by Börse Online:
ranked No. 2 on the SDax.
GfK Polonia, ranked No. 3 in Poland,
celebrates its 15th anniversary.
First Nuremberg stock exchange day
of GfK, Börse München and Münchner
Investment Club, visited by 1,000
investors.
2005 at a glance
GfK GROUP
2005 at a glance
July
The “Growth from Knowledge”
At the 2005 GfK Conference in
change for marketing and advertising
advertising campaign receives the
Nuremberg, entitled “The silver
in the consumer goods industry.
“reddot design award” placing it
generation: marketing for the markets
among the 22 prize winners selected
of tomorrow”, around 700 marketing
from a total of 3,000 competitors for
experts from across the world discuss
top quality design.
the consequences of demographic
GfK-Nürnberg funds chair in
marketing intelligence (mi) at the
Friedrich-Alexander-Universität in
Erlangen-Nuremberg. The chair
is the first of its kind at a German
university.
Launch of HealthCare operations in
South East Asia with the acquisition of
SoHealthAsia in Hong Kong.
Martin Hamblin uk and the British
nop companies merge to become
GfK nop; reorganization of activities
in the Custom Research, Media and
HealthCare divisions.
GfK Annual Report is ranked
No. 3 among SDax companies by
publication, manager magazin.
Delivery of 4,000 electronic metering
devices to measure tv ratings in India.
Official launch ceremony of the
GfK Academy, founded by
GfK-Nürnberg e.V., where middle
managers from industry, the media,
retail and the service sector learn
about international management.
Majority shareholding acquired in
Israeli research institute, GfK rt
Israel, in the Retail and Technology
division.
GfK-rus is the key participant in
setting up a specialist market research
department at the State University
Higher School of Economics (hse) in
Moscow.
The Supervisory Board approves
the 5 Star Initiative developed by
the Management Board, which
determines GfK’s strategic milestones for the next five years.
Construction work begins on the
Heinrich a. Litzenroth Memorial
District Hospital Ward in Sri Lanka.
August
The “Over the Rainbow” relief fund is
set up to support GfK nop employees
in New Orleans affected by Hurricane
Katrina.
GfK and nop World companies
operating in the Custom Research
division in the usa and Canada join
to form GfK nop North America.
September
With the GfK Post Merger Integration
Guide, Excellence Team iv presents
current guidelines for the integration
of newly acquired companies.
GfK is a sponsor of the “Du bist
Deutschland” (You are Germany)
advertising campaign, the biggest
multimedia initiative to enhance
Germany’s image.
October
170 GfK employees take part in
the 10th Nuremberg city run, of
which GfK is the main sponsor.
November
December
A total of 30,000 euros is donated to
three homes for orphans in Germany,
Chile and Sri Lanka.
GfK_3
The Supervisory Board
Hajo Riesenbeck
Chairman of the Supervisory Board
Director at McKinsey & Company,
Düsseldorf, Germany
Dr. Christoph Achenbach
hr Committee
Management spokesman for
Hajo Riesenbeck (Chairman)
Robert Klingel GmbH & Co. kg, Pforzheim
Dr. Wolfgang C. Berndt
Kerstin Döpfert
Jörg Bandt
until May 24, 2005
Audit Committee
Scope Data Collection Manager at
Dr. Arno Mahlert (Chairman)
Member of the Board of Directors of
the Institute for the Future, Menlo Park,
California, usa
Kerstin Döpfert
Independent Works Council representative at
GfK Aktiengesellschaft, Nuremberg, Germany
Sandra Hofstetter
from May 24, 2005
Senior Research Assistant at
Dr. Arno Mahlert
Member of the Management Board of
Tchibo Holding ag, Hamburg, Germany
Stefan Pfander
from May 24, 2005
Consultant at Wm. Wrigley Jr. Company,
Chicago, usa
Werner Spinner
Business consultant
Dieter Wilbois
Independent Works Council
representative (Chairman) at
Peter Zühlsdorff
until May 24, 2005 ordinary member
Honorary Chairman of the Supervisory Board
Managing shareholder of dih Deutsche IndustrieHolding GmbH, Frankfurt/Main, Germany
4_GfK
Stefan Pfander
Dieter Wilbois
Report by the Supervisory Board
GfK GROUP
In financial year 2005, the Supervisory Board kept itself informed on a regular basis of the
GfK Group’s business development, income and financial position, its personnel situation
and impending investments. It has monitored and advised on the activities of the company’s
Management Board and discussed all significant business events with the Management Board.
The Supervisory Board met seven times in financial year 2005. At these meetings, the
Management Board’s reports and the company’s prospects for development were discussed
in depth. The main topics here were the strategic direction of the GfK Group and its international acquisitions activity, the annual accounts for 2004, the development of business
during 2005 and the budget for financial year 2006. Also included were the adoption of the
annual accounts for 2004 and the budget for 2006. In financial year 2005, the Chairman
of the Supervisory Board maintained constant contact with the Management Board. In
particular, the Supervisory Board was involved in the preparation and completion of the
acquisition of nop World. Since closing the deal, in addition to the regular meetings, the
Management Board has advised the Supervisory Board in detail of the status of the integration
process in four conference calls.
The term “corporate governance” stands for responsible company management and control
geared towards long-term value added. The Supervisory Board has dealt exhaustively with
the rules of the German Corporate Governance Code and on December 14, 2005, issued a
declaration of compliance pursuant to Section 161 of the German Stock Corporation Act (AktG).
The company complies with almost all of the relevant mandatory and voluntary regulations.
The few deviations are indicated on page 14ff. of the present Annual Report, where they are
discussed in the Corporate Governance Report.
The Supervisory Board has formed two committees. The Audit Committee (Finance Committee),
which met four times in the reporting period, dealt with the company’s business development, income and financial position as well as impending investments. Additional focal points
were the investment policy for the company’s liquid funds, issues of financing, as well as
questions pertaining to the accounting system including interim reporting. As part of the
acquisition of nop World, financing models were discussed, in particular, the division of selffinancing and borrowing.
The Personnel Committee met five times in 2005. The focal points were the remuneration
of the Management Board and the appointment and remuneration of the Chief Financial
Officer. The initial appointment of Christian Weller von Ahlefeld as Chief Financial Officer
on June 1, 2005 is effective for three years in accordance with the rules of the German
Corporate Governance Code. Christian Weller von Ahlefeld has gained experience in a range
GfK_5
of management positions working for well-known international investment banks and
a major industrial concern. On June 1, 2005, Christian Weller von Ahlefeld took on
responsibility for Finances, Financial Controlling and Accounting as well as hr and
Administration, which the Chief Executive Officer of the GfK Group, Professor Dr. Klaus
l. Wübbenhorst, had assumed in the interim since April 2004.
On October 11, 2005, the Supervisory Board extended the appointment of Management
Board member, Wilhelm R. Wessels, by five years.
Hajo Riesenbeck is the Chairman of the Personnel Committee and the Audit Committee is
headed by Dr. Arno Mahlert. In December 2005, the Supervisory Board commissioned
external consultants to monitor the efficiency of the Supervisory Board of GfK. This involved
members of the Supervisory Board carrying out a self-assessment in the form of a written
questionnaire in January 2006. The results were compared with similar questionnaires
of other companies. The investigation is evidence of the good performance of the
Supervisory Board of GfK ag. It was noted that the relationship with the Management
Board is based on trust and facilitates a constructive dialogue with the focus on core issues
and advice and a forward-looking approach.
The committee has a sufficient number of members and the number of Supervisory Board
meetings is appropriate. Cooperation among members is considered to be open and
solution-oriented. Consultation between the Supervisory Board Chairman and the Chief
Executive Officer is close. Concrete suggestions are used and incorporated into the continued
cooperation.
With effect from May 24, 2005, Peter Zühlsdorff voluntarily resigned his seat. He retains
his connection with the company as Honorary Chairman. The Annual General Meeting
appointed Stefan Pfander, former Vice President and Europe Chairman of Wm. Wrigley Jr.
Company, Chicago, as his successor. The Supervisory Board is therefore extending its
experience in the consumer goods industry and looks forward to a successful cooperation.
In a meeting held on February 22, 2005, the Supervisory Board resolved that for financial
year 2004, it would decline a component of the variable remuneration which is linked to
the level of the dividend. This reflects that the Supervisory Board is prepared to treat the
increase in dividend separately from its remuneration. The Supervisory Board therefore
commissioned an examination of the remuneration regulations by an independent external
specialist. The proposal was resolved by the Annual General Meeting on May 24, 2005. In
future, remuneration will comprise a fixed component and a variable remuneration component. The variable component is dependent on the net income of the Group. As a benchmark, earnings per share will be examined as a three-year average. Further details on this
can be found on page 14ff. of the Corporate Governance Report.
6_GfK
GfK GROUP
The annual financial statements and management report for GfK ag and the GfK Group for
financial year 2005 have been audited by kpmg Deutsche Treuhandgesellschaft Aktiengesellschaft, Wirtschaftsprüfungsgesellschaft, Nuremberg, taking into account the book-keeping
and provided with an unqualified auditors’ report. All members of the Supervisory Board
received copies of the auditors’ report in good time ahead of the accounts meeting. The
Audit Committee of the Supervisory Board discussed these documents at its preparatory
meeting, as did the Supervisory Board plenum in its accounts meeting. Both these meetings
were attended by the auditors, who signed the annual and consolidated financial statements.
They reported on the audit in general and on the key points stipulated in the audit mandate
and also gave detailed responses to questions from the members of the Supervisory Board.
The Supervisory Board has noted the audit report and, following its own examination of the
annual financial statements prepared by the Management Board, has given its approval.
The financial statements are therefore adopted. The Supervisory Board has seconded the
proposal of the Management Board for appropriation of the profits.
The Supervisory Board would like to thank the members of the Management Board, the
Works Councils, all GfK ag staff and the staff of affiliated companies for their hard work
and commitment, in particular for the high level of involvement in the successful integration
of nop World.
Nuremberg, April 25, 2006
Hajo Riesenbeck
GfK_7
To our shareholders and business associates
Professor Dr. Klaus L. Wübbenhorst
Chief Executive Officer
Dear shareholders and business associates,
2005 was an exceptional year in the history of the GfK Group. The acquisition of the nop
World companies marked the most important milestone since the company’s ipo in 1999.
Growth from Knowledge, the claim expressed by the letters of our company name which
defines our services, acquired a new dimension in 2005.
1. Advance into the top league of market research companies
Together with nop World, GfK has advanced into the top league of global market research
groups. We are now one of the sales billionaires of the market research sector, with a
worldwide market share of around 5 %.
We are represented in over 70 countries on all continents. In most of these countries, we
are among the leading market researchers. Having our own subsidiaries in these countries
enables us to ensure a high level of quality and provide clients with key information and
advisory services. This in turn contributes to their success in the relevant markets.
We have significantly enhanced our positioning in three of the ten key market research
markets in the world. In the usa, by far the biggest, most mature and competitive national
market for marketing and market research, which we entered as little as six years ago, we
have rapidly advanced to be the No. 8 company in the sector. In the uk, the world’s second
largest national market, we are now the No. 2 market research group and in Italy, which is
the sixth biggest market, we are ranked in third place among competitors.
Our staff complement was also significantly expanded in 2005 and provides us with a unique and
valuable pool of talented, knowledgeable and creative employees. This applies in terms of basic
methodological knowledge relating to market research and marketing expertise as well as knowledge of local markets and practice. We count some leading lights in the industry among our staff.
With the new GfK companies, we can offer a range of data collection and analysis instruments,
which the “old” and “new” GfK companies have carefully developed over years and which
have proved highly successful, especially at international level. In addition, we provide a number
of innovative methods and technological developments. This means that we are well placed
to respond efficiently and precisely to any traditional and new issues on which our clients
base their marketing decision-making.
8_GfK
Letter to shareholders
GfK GROUP
Once the monopolies commissions in Germany and the usa had checked and approved
the merger, on June 1, 2005, we immediately started the integration process of the new
companies into our divisions and network. The high level of motivation and willingness to
cooperate shown by our colleagues from the former nop World have contributed to keeping
the rapid integration on schedule and within budget.
2. Strategy for the coming years: 5 Star Initiative
Following the expansion of the Group to include the former nop World companies, we have
reconsidered our strategy for the coming years. The 5 Star Initiative defines the strategic
milestones we consider to have priority.
The first initiative, Fact-based Consultancy, aims to expand our service offering consistently
to provide quality, information-based continuous advisory services for the top managers
of our clients. In addition to providing up-to-date, accurate information, more than ever, we
intend to be the essential partner for the market decision-making of our clients.
The second initiative, top 3, is based on the ambitious aim of becoming the No. 3 market
research company. On this basis, we will make a concerted effort to achieve at least a
No. 3 ranking in any of the divisions and countries in the regions of Europe, North, South
and Central America as well as Asia and the Pacific where this is not already the case.
The third initiative, Global Reach, is aimed at further expanding our existing network
that comprises more than 70 countries to include countries which are key market research
markets and where we do not already have our own subsidiaries.
The fourth initiative, Full Service, is designed to strengthen our position as a specialist
service provider with a focus on market research that offers a wide range of information,
analysis and advisory services in all marketing segments of the consumer goods, pharmaceuticals, media and services markets.
The fifth initiative, Excellent Financials, defines our medium-term financial targets. We
are working on approaching the 1.5 billion euro mark quickly and achieving a margin
of 13 % to 15 % in the next few years. We have also set clear targets for reducing debt
and the same applies to the tax ratio for the Group.
3. Human Resources: international focus
The change to a much more international workforce puts high demands on those involved in
global hr-related matters.
In order to promote our strategic aims by working together with our subsidiaries, we launched
the 5 Star Incentive as a long-term incentive for managers. The success of the incentive for
managers is based on two criteria that impact directly on corporate success: the average
growth in operating income of GfK for the next three years and the performance of GfK shares
compared with shares on the Dow Jones Euro Stoxx Media Index. Whether participants qualify
for the program is dependent on the achievement of individually agreed targets.
GfK_9
To our shareholders and business associates
The global hr strategy which has been approved comprises everything from regular
employee questionnaires on innovative concepts to actively promoting information
exchange between employees.
In early November 2005, the fifth Excellence Team launched a new project on the GfK brand.
Excellence has two objectives. It is a program to promote young talent and form future
GfK managers and at the same time, a think tank where cross-divisional issues that affect
the corporate culture and management principles can be taken up. In the past few years,
over 50 managers have addressed and implemented the following issues successfully:
our corporate values, the principles of employee management and leadership, the basic
principles on sharing knowledge and rules on the integration of newly acquired companies.
4. A year of success - financial year 2005
Last but not least, the results for financial year 2005 should be highlighted. There was plenty
of good news in a year in which we clearly exceeded our targets. Sales of more than 937
million euros were significantly higher than the target of around 900 million euros. Similarly, adjusted operating income reported according to ifrs in excess of 125 million euros
was considerably higher than the original target figure. In the international comparison of
margins, GfK’s achievement of 13.3 % is excellent. All of this has been possible thanks to
the outstanding work and commitment of our managers and employees worldwide and I
should like to take this opportunity to thank them on behalf of the Management Board.
5. Scheduled increase in dividend
Of course, we intend to let shareholders participate appropriately in our success. The
Management Board and Supervisory Board will propose a dividend of 0.33 euros per share
for financial year 2005 to the Annual General Meeting on June 29, 2006. I am pleased that,
once again, we are in a position to pay our shareholders a higher dividend as has been
the case each year since our ipo and that this is possible despite the major challenges and
investment that have been necessary in view of globalization and technological progress.
6. Financial year 2006 – a year of integration and above-average growth in income
The continued integration of the former nop World companies will be our focus in the
current financial year. We also intend to progress business consistently.
We anticipate total sales in excess of 1.1 billion euros. On the basis of the scope of consolidation of the year just ended, this corresponds to growth of around 18%. Organic growth is
once again expected to outperform sector growth in market research, which experts estimate at around 5 %. In addition, as in prior years, we intend to achieve a higher growth rate
in income than in sales.
10_GfK
Letter to shareholders
GfK GROUP
As in the past, we will continue to report promptly on performance. The publication of
details about our strategy and the targets for the GfK Group and the individual divisions
ensure transparent reporting that enables you to make an informed assessment of our
performance.
Growth from Knowledge, our claim to clients will continue to represent the biggest challenge
and opportunity for the GfK Group and its staff. Our corporate culture is convincing and we
pool vast knowledge that is more varied and has been enriched by the arrival of the “new”
companies and their employees. We combine a wealth of talent and experience in our highly
motivated employees and managers who will ensure that most of the Group’s growth is still
ahead of us. This is in line with our claim and applies to clients, the company and the people
working for it as well as the value of our shares, in which you as shareholders have placed
your trust over many years.
Let me thank all of you and ask you to continue to support our future growth.
GfK_11
From left to right: Dr. Gérard Hermet,
Petra Heinlein, Professor Dr. Klaus L.
Wübbenhorst, Christian Weller von Ahlefeld,
Wilhelm R. Wessels
12_GfK
The Management Board
GfK GROUP
The Management Board
Christian Weller von Ahlefeld
Petra Heinlein
born February 23, 1956 in Linnich
born June 6, 1958 in Flensburg
née Dengler, born October 7, 1958 in Bad Staffelstein
Chief Executive Officer (ceo) responsible
for Strategy, Internal Audit, Method and
Product Development, Public Affairs and
Communications and it Services
Chief Financial Officer, responsible for
Finances, Financial Controlling and
Accounting, Personnel and Administration
Responsible for the Custom Research
division
Professional background
Since 1998 Spokesman and, since 1999, ceo of
GfK ag, appointed until 2007
Since 2005 President of the Chamber of Industry
and Commerce for Middle Franconia in Nuremberg
1992 – 1997 Member of the Management Board
of GfK ag, 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, Gütersloh, becoming Managing Director of the Druck- und
Verlagsanstalt Wiener Verlag, Himberg near Vienna
Since June 1, 2005 Member of the Management
Board of GfK ag; appointed until 2008
2000 – 2005 cfo of the Tele-München Group
Since 2002 Member of the Management Board of
2001 Integration management on behalf of GfK ag
for the GfK Martin Hamblin Group and GfK Great
Britain, uk
1996 – 2000 Director and Head of Group Finance
at Siemens ag; founder and manager of Siemens
Financial Services
2000 Integration Management on behalf of GfK ag
for GfK Custom Research Inc. in the usa
1995 – 1996 Executive Director at sbc Warburg and
member of the Group Management
1992 – 2000 Managing Director of contest census
in Frankfurt
1983 – 1995 j. p. Morgan in New York, London and
Frankfurt, becoming Vice President and member of
the European Corporate Finance Executive
Committee
1985 Joined GfK as project manager with GfK
Marktforschung
1982 – 1983 Assistant to the management at
Heinrich d. Hansen in Flensburg
Education
Education
2005 Awarded the title of Honorary Professor by
the Friedrich-Alexander-Universität in ErlangenNuremberg
1981 Graduated in Business Administration from
the Freie Universität Hamburg
1984 Research Assistant at the ArnoldBergstraesser-Institut, Freiburg im Breisgau
Education
1984 Graduated in Political Science from the
University of Bamberg
1984 Doctorate from the Technische Hochschule,
Darmstadt
the Universität/Gesamthochschule, Essen
Dr. Gérard Hermet
Wilhelm R. Wessels
born January 19, 1951 in Montpellier, France
born October 12, 1952 in Haren
Responsible for the Retail and Technology
division
Responsible for the Consumer Tracking,
Media and HealthCare divisions
Since 1999 Member of the Management Board of
Since 1996 1996 Member of the Management
Board of GfK AG, appointed until 2011
1998 – 2000 Chairman of the French Marketing
Association (afm)
1991 – 1996 Managing Director of GfK ag
Gesundheitsforschung/i+g Gruppe Gesundheitsund Pharma-Marktforschung
1988 – 1998 General Manager of GfK Sofema,
France
1984 – 1998 Managing Director of GfK France, then
General Manager GfK Marketing Services, France
1978 – 1984 Employee of Burke Marketing
Research, Paris, France
Education
1978 Doctorate from the University of Grenoble
1986 – 1996 Managing Director of gpi
1978 Joined GfK, working for gpi Kommunikationsforschung Gesellschaft für PharmaInformationssysteme, Nuremberg/Frankfurt
Education
the University of Saarbrücken
1975 mba from the French Business School (icn)
GfK_13
Corporate Governance
Since 2002, the German Corporate Governance Code (“Code”), with its recommendations and suggestions, has been added to the statutory regulations. Recognition of these principles will promote
and strengthen the confidence of shareholders, clients, employees and the public in the national
and international stock markets. The Management Board and the Supervisory Board support
responsible management and control of the GfK Group all geared towards increasing value added.
In the past, GfK already largely complied with the recommendations and suggestions of the Code.
For over ten years, there have been standing rules for the Management Board and the Supervisory Board. Since its stock market flotation in 1999, GfK has issued quarterly reports and
broadcast its Annual General Meeting and accounts press conference on the Internet. In order
to make it easier for private and institutional shareholders to exercise their voting rights, GfK
has appointed a proxy since 2003. Further details can be found on the website or can be
discussed with Investor Relations. GfK will continue to improve and expand the information
supplied on the Internet.
The Supervisory Board and the Management Board have resolved to disclose their remuneration
components from financial year 2004 onwards. Since the end of financial year 2005, GfK has
also complied with the statutory publication obligations relating to quarterly reports. From 2006
onwards, GfK intends to publish its Annual Report within the given deadline where possible.
The first publication deadline after this is April 4, 2007. With these measures, the company
will comply with almost all mandatory and voluntary regulations. Since the initial publication
of the Code, GfK has gradually reduced the number of deviations from its regulations. This
applies not only to the mandatory recommendations, but also the voluntary suggestions.
Total remuneration and shareholdings of the Management Board
and Supervisory Board
The individual remuneration components of the Supervisory Board and the Management
Board have been disclosed from financial year 2004 onwards. In 2005, these comprised:
Remuneration of the Management Board*
Fixed
components
Variable
components1)
Total
remuneration
Stock options
Prof. Dr. Klaus L. Wübbenhorst (ceo)
539.9
1,228.2
1,768.1
40,000
Petra Heinlein
319.2
756.5
1,075.7
26,666
Dr. Gérard Hermet
371.0
752.5
1,123.5
26,666
Christian Weller von Ahlefeld2)
189.7
385.0
574.7
26,666
Wilhelm R. Wessels
361.1
603.5
964.6
26,666
2005
1,780.9
3,725.7
5,506.6
146,664
2004
1,709.1
2,492.8
4,201.9
122,221
in eur ’000
* This financial information also forms an integral part of the information given in the Notes to the consolidated financial statements
as of December 31, 2005.
1) The calculation of the variable component is based on certain key figures in the consolidated financial statements.
2) From June 1, 2005
Further information on the remuneration of members of the Management Board can be found
in the Notes to the financial statements in the present Annual Report on page 135. In financial
year 2005, members of the Management Board executed five share transactions with a total of
49,517 shares. This comprises two transactions (47,117 shares) for the exercising of options
14_GfK
GfK GROUP
and subsequent sale of shares and three purchases comprising 2,400 shares overall. As of the
reporting date of December 31, 2005, members of the Management Board held a total of
389,287 GfK shares and 717,424 GfK stock options. The remuneration of the Supervisory Board
in 2005 comprised:
Remuneration of the Supervisory Board*
in eur ’000
Fixed components
Variable components
Total remuneration
Hajo Riesenbeck (Chairman)
27.0
18.0
45.0
Dr. Arno Mahlert (Deputy Chairman)
18.0
12.0
30.0
11.3
7.5
18.8
3.5
2.4
5.9
11.3
7.5
18.8
Kerstin Döpfert
Jörg Bandt1)
10.3
6.9
17.2
Sandra Hofstetter2)
5.5
3.6
9.1
Stefan Pfander2)
5.5
3.6
9.1
Werner Spinner
10.7
7.2
17.9
Dieter Wilbois
11.3
7.5
18.8
3.5
2.4
5.9
2005
117.9
78.6
196.5
2004
69.1
157.6
226.7
Peter Zühlsdorff 1)
* This financial information also forms an integral part of the information given in the Notes to the consolidated financial statements
1) until May 24, 2005
2) from May 24, 2005
No further remuneration was granted. In 2005, the remuneration system of GfK ag, which
was resolved by the Annual General Meeting last year, was used for the Supervisory Board
for the first time. It focuses on the roles and the responsibilities of the Supervisory Board
members and the financial performance of GfK. Essentially, the following elements are
included:
In addition to expenses, members of the Supervisory Board receive fixed remuneration of
eur 9,000 payable at the end of the financial year. They also receive annual remuneration
which is performance-based and dependent on earnings per share. A threshold value of
eur 0.30 per share (in accordance with ifrs) was determined in 2005. If this value is achieved, each beneficiary receives a sum of eur 500. For every eur 0.10 that earnings per share
exceed this value, each beneficiary receives a further eur 500. The threshold value increases
eur 0.10 every year. Three financial years are taken into consideration when calculating the
earnings per share value. The current financial year and the two preceding years are used
to establish an average. Performance-related remuneration may only amount to one and a
half times the fixed annual remuneration.
The Chairman of the Supervisory Board receives two and a half times the fixed and
variable amounts mentioned above, and the Deputy Chairman receives one and a half
times this amount.
Remuneration increases by 25% per membership of a committee and by 50 % per chair of
a committee, up to a maximum of 100% of the total of the fixed and variable remuneration.
GfK_15
GfK compensates every Supervisory Board member for any vat applying to their remuneration
and reimbursement of expenses. Supervisory Board members who have only held their
position for part of the financial year are compensated on a pro rata basis.
The Supervisory Board and/or their dependents have carried out 7 share transactions
altogether, totaling 2,523 GfK shares. This involved a purchase of a total of 1,024 shares
and six sales of a total of 1,499 shares.
The Supervisory Board owns a total of 6,689 GfK shares.
Details of the individual transactions by members of the Supervisory Board and Management Board are published on the website in accordance with the Code.
Explanations for deviations from the Corporate Governance Code
Pursuant to Section 161 of the German Stock Corporation Act (AktG), the management and
supervisory boards of listed companies must declare each year, the extent to which they
have complied with and will continue to comply with the recommendations of the Government Commission German Corporate Governance Code published by the Federal Ministry
of Justice in the official section of the online Federal Gazette and which recommendations
have not been or will not be complied with. The declaration must be made available to
shareholders at all times. The Code contains regulations, some of which are binding. In
addition to outlining the prevailing company law, it also includes recommendations from
which companies may deviate, although such companies are then obliged to publish
information on such deviations each year. The Code also contains suggestions which may
be deviated from without the need for this to be disclosed. GfK ag has been publishing
details of deviations from recommendations and suggestions since 2002. These are reported
separately below.
I. Recommendations
The Management Board and Supervisory Board of GfK ag declare that they have complied
with and will continue to comply with the recommendations of the Government Commission
German Corporate Governance Code in the version of June 2, 2005 published by the German
Ministry of Justice on July 20, 2005 in the official section of the online Federal Gazette. Only
the following recommendations will not be applied:
1) Point 4.2.3. deals with variable remuneration components for the Management Board.
With regard to stock options, there is a request for “the Supervisory Board to agree a
limitation option (cap) for extraordinary, unforeseeable developments.”
GfK’s stock option program expired on December 31, 2004, i.e. this was the last date on
which eligible persons had the option of choosing to receive cash or stock options. There
is currently no cap on this program. Tranches already issued or still to be issued may be
exercised up to and including December 31, 2011. Further details are available on page 121ff.
On December 12 and 14, 2005, the Management Board and the Supervisory Board agreed
a new program which complies with the requirements of point 4.2.3, and includes a cap
option.
16_GfK
GfK GROUP
The new 5 Star Incentive program has the following objectives:
The program continues on the same basis as the current stock option program, without
issuing new shares. As with the previous incentive program, the intention is to bind
management staff to the long-term, operational and strategic corporate goals.
The life of each tranche is three years. Payment will contain a cash benefit in place of
shares. The decision of an employee to waive part of the variable remuneration components
creates an entitlement vis-à-vis GfK to allocation of virtual GfK shares. The number of virtual
shares acquired is calculated on the amount of substituted remuneration and the GfK share
price, which is based on the average price of the last 20 trading days before the year-end.
For every virtual GfK share acquired, the employee initially receives a further performance
share. However, the number of performance shares granted by GfK may change. The two
performance criteria governing this are the increase in operating income and the development of the GfK share price, both over a period of three years.
For the first tranche: if operating income increases by only 4% during the allotted time
period, the performance shares linked to this target expire. If operating income increases
by an average of at least 14%, the number of performance shares doubles. Profit forecasts
of 15 Dow Jones Euro Stoxx Media index-listed companies for the coming three years were
used to determine the target.
The GfK share price performance is measured against that of companies listed in the Dow
Jones Euro Stoxx Media index. If the GfK share price falls within the best 25 %, the number
of performance shares linked to this target is doubled. If the share price falls in the lower
50%, performance shares expire.
In line with the target achievement, GfK issues up to a maximum of two performance shares
for each virtual share allocated in place of variable remuneration. In accordance with the
Corporate Governance Code, this is limited to five times the variable component waived by
the employee.
2) Point 7.1.2 regulates the publication of the consolidated financial statements within
90 days and interim reports within 45 days
GfK has complied with the 45-day period for the publication of the quarterly results since
January 1, 2005. The Annual Report was published 101 days after the year-end in 2005.
In 2006, GfK will be unable to meet the 90-day target. This is due to the acquisition of nop
World on June 1, 2005. Based on sales in 2004, nop World is around half the size of GfK.
nop World also previously used uk gaap accounting standards. As of the 2005 year-end, GfK
switched from us gaap to ifrs. For this reason, GfK announced in its quarterly report as of
September 30, 2005 that it would publish its 2005 financial statements on May 2, 2006. This
corresponds to a period of 122 days. GfK will shorten publication time significantly in 2007.
GfK_17
II. Suggestions (note: there is no obligation to explain any deviations
from suggestions)
The Management Board and Supervisory Board of GfK ag declare that they have complied
with and will continue to comply with the suggestions of the Government Commission
German Corporate Governance Code in the version of June 2, 2005 published by the
German Ministry of Justice on July 20, 2005 in the official section of the online Federal
Gazette. Only the following recommendations will not be applied:
1) Point 2.3.3: the Management Board should ensure the appointment of a representative
to exercise the voting rights for shareholders in accordance with instructions; such
person should also be contactable during the Annual General Meeting.
In the past, the GfK has appointed a representative to exercise the voting rights before the
Annual General Meeting and will continue to do so in the future. The representation of
the shares is assumed in accordance with the regulations listed in the notification of the
Annual General Meeting. The details are published in the agenda and on GfK’s website at
www.gfk.com/Investor. Voting during the Annual General Meeting is currently difficult for
technical reasons. As soon as a practicable solution has been found for the secure transmission of the votes, the company will look at introducing such a system.
2) Point 2.3.4: pursuant to point 2.3.4 of the Code, the company should enable
shareholders to follow the Annual General Meeting using modern communication
media (e.g. the Internet)
Since GfK has been listed on the stock exchange, the Annual General Meeting has been
broadcast on the Internet. The webcast lasts until the end of the report by the Management
Board. The company has refrained from broadcasting more of the meeting in order to
protect the privacy rights of the shareholders and will continue to refrain from doing so.
A corresponding declaration is also available at www.gfk.com/Investor/Corporate Governance.
The Compliance Officer monitors compliance with the principles and reports back on this to
the Supervisory Board at least once a year.
Since the beginning of 2005, GfK employees have had the opportunity of passing information
to the Chairman of the Finance Committee, Dr. Arno Mahlert, via the GfK ag Intranet. Plans
to externalize this process are currently under consideration.
GfK will continue to improve communication with shareholders and dealers as well as with
the public. The aim is full compliance with the Code.
Compliance Officer: Bernhard Wolf
Tel. + 49 911 395 2012
18_GfK
Fax + 49 911 395 4075
GfK shares
GfK GROUP
GfK shares
2005 financial year: global increase in share prices
The trend in the stock markets last year awakened memories of the stock market
euphoria around the new millennium. Almost all the major global stock market indices
showed a very positive trend and growth. This was particularly true of the stock markets
in Europe, Asia and the Arab countries. In contrast, the usa and China were major losers
last year.
Demand for German equities was very buoyant
in 2005, not only from domestic, but also international investors. Low company valuations,
successful restructuring activities and generally
stronger corporate earnings growth compared
to the usa are some of the reasons why liquidity
from abroad flooded into the German equity
market. This made the Deutscher Aktienindex
(Dax), which rose by 27%, one of the winners
amongst the European stock markets. Two German
stocks are heading the ranking list of stocks
included in the Euro-Stoxx-50.
GfK shares: key data
German Securities Code
587530
isin (International Stock
Identification Number)
DE0005875306
Reuters
GFK.DE
Bloomberg
GFK GR
Datastream
D:GFKX
First Call
GFK.DE
As in the previous year, 2005 was once again a year for second-tier stocks in Germany.
These clearly outperformed the Dax. The MDax, which consists of 50 stocks, rose more
strongly than the Dax throughout the whole of 2005, increasing by 36 % and giving it the
edge over the other important German indices. The SDax followed with growth of around
35%. The TecDax brought up the rear, moving upwards by only 15%. The European index
for media stocks, the Dow Jones Euro Stoxx Media, also turned in a fairly disappointing
performance, rising by just under 13% in 2005.
Highest and lowest values of GfK shares from January 2005 to March 2006 in eur
38.50
37.21
37
34.50
34.25
34
32.64
33.05
32.32
32.90
31.78
31.59
31
30.00
29.90
33.40
31.80
31.60
29.69
28.99
28.72
28.42
27.50
31.50
31.00
29.50
28
31.45
27.25
28.00
27.77
25
28.30
27.00
25.90
Jan 05 Feb 05 Mar 05 Apr 05 May 05 Jun 05 Jul 05 Aug 05 Sep 05 Oct 05 Nov 05 Dec 05 Jan 06 Feb 06 Mar 06
Highest and lowest share price
Monthly closing price
GfK_19
GfK shares
GfK share price performance from January 1, 2005 to March 31, 2006 in eur1)
50
45
40
35
30
25
January 2005
April 2005
July 2005
October 2005
January 2006
1) All values are indexed to the GfK share price
GfK
SDax Performance
Dax 30 Performance
dj Euro Stoxx Media
In addition to the upturn in the German economy, four other factors were significant for
trends in the European stock markets:
The loss of investors’ confidence in the European Union. The main reasons for this were
the rejection by the French and the Dutch of the draft joint European constitution, and the
failure of European politicians to reach agreement on financial policy at the Brussels eu
summit. The us dollar strengthened by around 15% compared to the euro over the year.
The further increase in unemployment figures, which exceeded five million at the
beginning of the year for the first time in the history of the Federal Republic of Germany.
It was only through bringing forward the new elections to the second half of the year
and the election of Angela Merkel as Chancellor that the confidence of international
investors in Germany was strengthened.
Natural disasters such as Hurricane Katrina in the usa and the earthquake in Kashmir
as well as renewed terrorist attacks led to a sharp rise in oil prices around the world.
In the usa, trends on the Dow Jones and nasdaq stock market indices were hampered
by the continuing strict interest rate policy of the us central bank. Key lending rates
were raised in seven stages over the year from 2.25 % to 4 % at year-end. Investors also
avoided the us markets as a result of the anticipated lower earnings growth of American
companies compared to Europe. The stock market year 2005 even ended with a minus
of 0.6% for the Dow Jones, placing it at the bottom of the league compared to the various
global indices.
20_GfK
GfK shares
GfK GROUP
GfK shares: consolidation at a high level
Having risen steadily for about two and a half years,
and shown overall upward movement of around
50% in 2004, 2005 was a year of consolidation for
the GfK shares. At the end of the last financial year,
the market value went out of trading limits down
1% at around eur 28.30. However, it was also
possible for investors to generate profits from GfK
during this period. The share price continued to
rise until mid-2005 and at the end of June it was
trading at 20% above the closing price of year-end
2004.
GfK share price performance comparison
From ipo to
in 2005 08.03.20061)
GfK
– 1.2 %
Dax
+ 27.1 %
+ 85.5 %
+ 2.1 %
SDax
+ 35.2 %
+ 46.4 %
dj Euro StoxxMedia
+ 12.5 %
– 28.2 %
1) Compared with the ipo of eur 15.42 as of
September 23, 1999 (adjusted for the capital
increase from company funds)
The trend was only reversed when GfK published its half-year results in mid-August.
The unsatisfactory business trend at the English subsidiary GfK Martin Hamblin
and in the Consumer Tracking division in Switzerland prompted GfK to reduce its
earnings forecast for the GfK Group (excluding nop World) from eur 120 to eur 110
million. Although the overall forecast, including nop World, remained unchanged,
the share price slipped back significantly in the following weeks. It fluctuated
between eur 26 and eur 32 and did not depart from its sideways trend again until
the year-end.
GfK shares: key indicators
Unit
2004
2005
High
eur
28.80
34.25
Low
eur
18.75
25.90
Closing price
eur
28.65
28.30
Average daily volume traded
No.
14,517
19,383
No. of no-par shares (weighted)
No.
31,366,611
33,486,383
No. of no-par shares as of Dec 31
No.
31,474,522
35,047,692
eur m
898.7
991.8
17
21
Stock market capitalization as of Dec 31
Ranking in the S-Dax
by sales
by market capitalization
Index weighting by market capitalization
Dividend1)
2
2
in %
4.7
4.0
eur
0.30
0.33
eur m
9.4
11.6
Earnings per share
eur
1.35
1.77
Free cash flow per share 2)
eur
2.22
2.79
Total dividend1)
1) Proposal to the Annual General Meeting on June 29, 2006
2) Figures adjusted for the capital increase
GfK_21
GfK shares
For shareholders who acquired their shares at the time of flotation in 1999 and have since
held them, there was a price gain of around 84 % as of the end of 2005. This corresponds
to an annual return on capital employed of 10.5 %. Investors who reinvested the dividend –
which included a corporation tax credit up to 2000 – in the stock on the day of the payout,
achieved a return of 12.7% per annum in the same period.
By comparison, an alternative investment in German government bonds during the same
period would have generated an average return of almost 4.0 % per annum.
Analysts’ recommendations: ten investment banks follow GfK
As in 2004, GfK was closely observed and evaluated by a number of equity analysts in the
last financial year. The total of ten was unchanged from the previous year. Given the high
level of personnel turnover in investment banking in 2005, this cannot be assumed to remain
unchanged. However, the rotation of analysts also creates opportunities for GfK. The change
in analysts extends the circle of banks with proven expertise with regard to GfK. Frequently,
a bank resumes coverage after an analyst has left. At the same time, the analysts who have
left the bank continue to cover GfK on behalf of their new employers.
According to a current survey by dirk (German Investor Relations Association), the average
number of active analysts following a stock is currently about 7 per company in the SDax.
GfK is much better placed with 10 analysts.
In 2006, GfK will seek to establish close contact with as many investment banks as possible
in order to extend the coverage further.
2005 Annual General Meeting well attended
As in previous years, the Annual General Meeting in Nuremburg on May 24, 2005 was
well attended. With 479 shareholders and representatives, the number of participants
was up slightly on the previous year. Overall, 72.1% of the voting capital was represented.
Many other investors also followed the Annual General Meeting live on the Internet.
The most important decisions related to the extension of the share buyback program
until November 23, 2006 and the creation of new authorized capital. The authorization
relates to up to 10.8 million shares and is valid until May 23, 2010. The shareholders
also approved the adjustment of the remuneration of the Supervisory Board. In future,
the performance-related element of the remuneration will be linked to earnings per share
and not, as was previously the case, to the dividend per share.
22_GfK
GfK shares
GfK GROUP
Dividend total: 23 % up on the previous year
The Management Board and the Supervisory Board will propose an increase in the
dividend to eur 0.33 per share to the agm. This represents a 10 % increase on the
previous year’s figure of eur 0.30. The total payout has risen by as much as 23 % from
eur 9.4 million to eur 11.6 million as a result of the increased number of shares. Since
flotation in 1999, GfK has steadily improved its dividend. During this period the payout
per share has risen by 200%.
Capital increase: share capital increased by 10%
On June 2, 2005 GfK undertook a 10 % capital increase with no subscription rights.
3,146,689 shares were therefore placed with institutional investors as part of an
accelerated bookbuilding process at a price of eur 28.70 per share. Issue revenue
totaling eur 90.3 million was used to partly refinance the costs of acquiring nop World.
The purchase was completed on the previous day, following approval by the monopolies
commission in Germany and the usa. As part of the transaction, the share capital of
GfK ag was raised from eur 133.7 million to eur 147.1 million against a cash contribution.
The market reacted very positively to the transaction. The shares were placed after about
an hour and a half. When the bookbuilding process ended after five hours, the capital
increase had been oversubscribed three times. Because demand for the new shares was
only partly satisfied, the share price rose again immediately after the transaction was
completed and closed up above the previous day’s level.
Shareholder structure: great interest in English-speaking countries
The composition of the shareholder base has altered significantly compared to the previous
year. The main reasons for this are the capital increase in June and the exercising of options
as part of the stock options program for the company’s managers. The proportion of the
company owned by the largest single shareholders in the company has therefore declined
again. Since GfK-Nürnberg e.V. did not participate in the capital increase, its proportion of
the share capital has been reduced from 63.8 % to 57.3 %. The proportion of shares in
free float rose from 36.2% to 42.7%. The Management Board and the Supervisory Board
hold around 1.1% of the shares.
GfK_23
GfK shares
GfK shareholder structure as at March 31, 2006
GfK-Nürnberg e.V. 57.3 %
Management Board and
Supervisory Board 1.1 %
Institutional investors
27.8 %
of
of
of
of
of
11.4
8.6
2.5
2.4
2.9
which
which
which
which
which
usa
uk
France
Germany
other
%
%
%
%
%
Private investors 13.8 %
Interest from institutional investors in the company has increased again sharply. To a
certain extent the capital increase met increasing demand. Compared to the prior year,
their proportion of the share capital increased from 20.6 % to 27.8 %. us investment funds
in particular became more heavily involved than before. At year-end they held 11.4 %
of the shares (prior year: 6.2 %) followed by investment funds in the uk with 8.6 % (prior
year: 5.7 %) and France with 2.5 % (prior year: 3.1%). In contrast, the proportion held by
German investment funds increased to 2.4 % (prior year: 2.2 %). One likely reason for the
considerable interest from Anglo-Saxon and French investors is that GfK’s listed competitors
are based in these countries.
The proportion held by private investors fell slightly from 14.1% in the prior year to 13.8 %.
Placing in the SDax: index heavyweight
GfK has further strengthened its position in the SDax. Over a long period the shares even
had the heaviest index weighting. At year-end they ranked No. 2 again, as in the
previous year. In contrast, the GfK shares slightly improved their position in relation to
market capitalization from No. 48 to No. 47.
In relation to average market trading volume of the last 12 months, GfK ranked No. 74 at
the year-end (prior year: No. 67). Average trading volume on the Frankfurt stock market and
on xetra increased on a cumulative basis to 19,400 shares per day (corresponding period in
the prior year: 14,500 shares).
24_GfK
GfK shares
GfK GROUP
Communications: further improved
GfK attaches great importance to detailed, comprehensible communications on the
same level with investors, analysts, and financial journalists. It regards dialogue with
institutional and private investors as the crucial means of explaining GfK’s business
model and activities clearly and comprehensibly. Prompt, but more importantly, relevant
information for all interested parties is key to the communications strategy.
In addition to the Annual General Meeting, the company gave presentations last year at
10 international investor conferences,
2 dvfa analysts meetings,
8 roadshows in the usa, England, France, Germany and Austria,
9 conference calls,
175 individual conversations with fund and sales managers,
the Munich Stock Exchange Day attended by more than 3,000 investors and
the first Nuremburg Stock Exchange Day, initiated by GfK and attended by around
1,000 delegates.
Investor relations work: award-winning
In 2005, GfK once again received an award for its commitment to communications with its
shareholders. The bird (Best Investor Relations Germany) award from investment magazine,
Börse Online, represents the views of many private investors on how well the 160 largest
listed public limited companies perform in relation to their capital market communications.
Having been honoured last year with first place in the overall ranking, the company has
this year come second in the Small Caps category with a total of 70.41 points, very close
behind the No. 1 with 70.50 points.
GfK is very pleased to receive so much recognition and also regards this as a further
incentive to continue on its course of open and reliable communications in future and to
steadily develop and improve its efforts in this area.
GfK_25
26_GfK
GfK Special
Knowing what consumers want, think and feel is the key to ensuring corporate
success and sustainability. In increasingly competitive markets, marketing
and sales decision-makers are becoming more dependent on detailed and target
group-based information to identify different consumer attitudes and behavior.
GfK SPECIAL
GfK provides knowledge relating to markets, brands and people in more than
70 countries in all economically relevant regions of the world. Reports from
six countries highlight the differences in lifestyles, behavior and attitudes between
the populations.
Germany
Page 28
Caught between fear of the future and a sense of happiness. Germans and reunification
17 years on.
Western and Southern Europe
Page 34
Italy – bridging world cultural heritage and corporate globalization. Living the dream:
the population of the perfect tourist destination face up to current economic reality.
Northern Europe
Page 40
uk – black humor and living for the present. The Brits maintain their unique lifestyle despite
the effects of globalization.
Page 46
Russia – from socialist state to modern market economy. The population is adapting its
attitudes and requirements to the advanced market and fast-moving economy.
America
Page 52
usa – from freedom of choice to consumer enthusiasm. American consumers are combining
their constitutional right to freedom of choice with an infinite passion for consumption.
Asia and the Pacific
Page 58
Japan – an unusual blend of cultural tradition and economic power. The hallmark of this
“rich, mature market” is the demanding consumer who focuses on quality.
usa – consumption nirvana. Nowhere else do consumer goods manufacturers, service providers,
retailers and the media invest more in attracting and retaining customers.
GfK_27
28_GfK
Germany:
Caught between fear of the future
and a sense of happiness
Germany
17 years after reunification, Germany is still searching for a common self-image. This is mostly evident
GfK SPECIAL
in the various discussions regarding German identity and mentality at a time where Europe and
the global economy are dominating forces. The search for this new German identity is also reflected
in consumer behavior, with the latest trends revealed by market researchers and opinion pollsters.
Christoph Metzelder plays defense for Borussia Dortmund and Germany’s national football team. In
Germany’s Zeitwissen magazine, he asked the most
important of all German questions: “What is considered
to be typically German?” There were many highly
interesting answers, one of which was offered by
geographical and cultural expert, Hans-Dieter Gelfert,
author of Was ist deutsch? (What is German?): “The
most German characteristic of the Germans is their
concern that they cannot be as German as they would
like to be. They complain about their lack of national
pride and at the same time object to every form of
nationalism.” However, according to Hermann Brusinger, also a geographical and cultural expert and
author of Typisch deutsch (Typically German): “It is
impossible to define typical – in any case, the German
population is far too varied for that.” In fact, the image
of the Germans differs through the eyes of geographical
and cultural experts. In his masterpiece, The Man
Without Characteristics, Robert Musil has the perfect
explanation. In the words of the great Austrian author:
“It is always wrong to simply explain a country’s
traits by the character of its population. This is because
even just one member of the country’s population has
at least nine roles – one professional, one national, one
state, one class, one geographical, one gender, one
conscious, one subconscious and maybe even one
more private character.” This final observation is
shared by many of today’s identity thinkers who claim
that we cannot refer to just one private identity, since
every person indeed has several.
Highly developed “culture of whining”
According to Musil, an individual’s identity and
character remain stable for only a relatively short
period in relation to the overall passage of time.
And this is precisely the problem faced by market
researchers today when displaying the opinions
and behavior of an entire nation as precise facts and
figures. It is also why market research needs to be
repeatedly updated.
The results are not always surprising: sometimes
they fall almost exactly in line with the general
preconceptions. Responses to the question “How
happy are you with your life?” asked by Roper
Reports Worldwide, often confirm the typical notion of
whining Germans. Only 7 % put a tick against “very
happy”, which is 13% lower than the international
average. The Japanese claim to be less satisfied with
4% and the Russians with 6%, while the Americans
are among the happiest people in the world with 40 %.
So is the “whining culture” in Germany a question of
mentality? If you ask Germans what bothers them the
most, the answer will nearly always be unemployment.
This was the result of the Challenges of Europe study
conducted by GfK-Nürnberg e.V. The highest priority by
far for Germans is the creation of new jobs, with 81%
believing that this is paramount. The average figure
for this in Europe stands at just 37 %. There are,
however, six other European countries in which
unemployment is on the population’s list of worries.
Nowhere in Europe do consumers pay more attention to the price of food than in Germany.
GfK_29
»While the Americans prefer sightseeing,
the Germans enjoy lazing around in the sun (48%) and eating out.«
German values post materialistic
Overall, there is very little separating the common set
of values held by the Germans and their neighbors.
86% consider individuality to be the most important
general value in their lives and want to “remain true
to themselves”. The same applies to 90 % of Italians
and 89 % of Britons, according to the findings of
a study entitled “Consumers in Central and Eastern
Europe”, carried out by GfK Lebensstilforschung.
Around 76 % of Germans renounce materialism,
stating that character development is more important
than “earning a lot of money”. Even in the acid test,
where respondents had to decide between character
development and the materialistic value of “striving
for success and prosperity”, the post materialistic
outlook scored 62%.
Germany
Population and country
Over 82 million in an area of 357,000 km2.
87% live in urban areas.
Population density
230 per km2. Berlin 3,804 per km2,
Munich 4,149 per km2.
Per capita gdp/
disposable income
eur 25,500/eur 17,700.
Average age/household size
42.2/2.1
What they think and how they live
81% of Germans say unemployment is the most important challenge facing
their country, compared to a European average of 37%.
With a savings ratio of nearly 11%, Germans are among the best savers, along
with the Belgians, French, Irish, Italians and Portuguese. The corresponding
figure for Australia is minus 2.2%.
Germans work an average of 22.8 hours a week, nearly five hours less than Russians.
They listen to an average of 11.5 hours of radio a week, compared to an
international average of 8 hours.
62 % say price is the most important factor when buying food. The international
average is 54%.
52 % spend their vacations at the seaside, compared to an international average
of 38 %.
7% describe themselves as very happy, compared to an international average
of 20 %.
78 % say financial security is important to them, compared to an international
average of 64%.
Sources: GfK Custom Research Worldwide, GfK European Consumer Study, GfK Challenges of Europe
study, Roper Reports Worldwide, GfK Regional Research.
The European Consumer Study carried out by the
GfK-Nürnberg e.V. found that German consumers
were more concerned about price than quality and
favored traditional products rather than the latest trends.
This reflects another discovery by GfK Lebensstilforschung (Lifestyle Research), which stated that 63 %
even wanted to reduce their consumption. Individuality
also appeared to be losing ground when it came to
purchasing habits. Just 24% of consumers want to buy
things that others do not have, while this is an irrelevant
consideration for 76%.
Germans like relaxing holidays
Much more important for “a happy life” is travel. This
is true of almost all countries, with the exception of
Russia, where only 26% expressed an interest in the
activity. Yet 40 % of Americans, 53 % of Japanese
and 46 % of Germans would not want to give up this
right. A study conducted by GfK and The Wall Street
Journal Europe on holiday conventions in Europe
and the usa uncovered some interesting information.
The Greeks, Fins and Austrians like to go on activity
holidays and, while the Americans prefer sightseeing,
the Germans enjoy lazing around in the sun (48%)
and eating out (36 %). Between these two activities
comes walking (41%).
What about those aged 50 +, the “silver generation”?
These gray-haired individuals are lively and affluent and
have an important role to play – and not just in terms
of tourism. The proportion of fast moving consumer
goods purchased by this group has risen from 29.2 %
to stand at 32.2 %. The average purchasing power
of Germans aged 50 + currently totals 21,244 euros,
which is over 2,000 euros more than that of those
aged 50 and under. Disproving the long-held prejudices,
members of the silver generation are happy to part
with their money. And they are living longer, as it is
expected that today’s average 60 year-old woman will
live for another 24 years and an average 60 year-old
man for another 20 years.
As to how Germans live and think, it appears that
Musil’s theory was right and that new definitions and
studies are necessary to describe what is regarded
as being “typically German”.
For many years, 4 in 5 Germans have believed that unemployment is the country’s biggest problem.
30_GfK
GfK_31
GfK SPECIAL
Germany
Germany:
A leading force in the local and global markets
32_GfK
The GfK consumer climate study,
launched in Germany in 1983, now
covers Britain, Denmark, Austria,
Sweden, and a series of central and
eastern European countries. In 1985,
the company began producing German
tv ratings, first for the state-owned
broadcasters and later for the Television
Research Partnership (agf).
Awards
Investor Relations was ranked second
in the S-Dax by investors surveyed by
the German business magazine, Börse
Online
The Annual Report was the third best
of any S-Dax company according to
Manager Magazin
GfK’s international “Growth from
Knowledge” advertising campaign
won the global “reddot” award
Germany
The Group has always been a pioneer
of professional innovation in German and
European market research. In 1936 it
carried out the country’s first brand study,
on the cross logo of pharmaceutical
company Bayer, and a year later it
published the first German purchasing
power figures, which are now also
produced for the rest of Europe and
overseas.
In the mid-1950s, GfK joined the European
frontrunners when it adopted consumer
panel research after its development in
the United States. It also began expanding
its international network at a very early
stage, and in 1960 co-founded Europanel,
which, together with British partner
Taylor Nelson Sofres, it today uses to
carry out continuous studies of consumer
purchasing patterns in 26 European
countries.
GfK SPECIAL
GfK is Germany’s oldest market research
company, established 72 years ago at
the University of Erlangen-Nuremberg.
This is where professional market
research in Germany originated and
Nuremberg is still the main center of
market research in the country, thanks
in no small part to the success of GfK,
which has been the market leader for
more than twenty years.
At 7%, very few Germans would say
that they were very happy.
Today, GfK is the country’s undisputed
market leader, with a market share of
well over 25 %.
2005 and 2006 highlights
The most important event of the year
for German employees was GfK’s
acquisition of nop World. After the
acquisition of GfK nop, Germany is
the country that still accounts for the
largest part of GfK’s sales.
In the first quarter of 2006, GfK Fernsehforschung was asked by agf to switch
to a new measuring methodology for its
tv household panel in mid-2007.
Germany
Selected companies
Custom Research
Segment
market rating
No. 2
GfK Marktforschung
GfK prisma
GfK macon
No. 1
GfK Marketing Services
encodex International
Beyen Marktforschung
media control GfK international
Consumer Tracking
No. 1
GfK Panel Services
Media
No. 1
GfK Fernsehforschung
Media Markt Analysen
enigma GfK
HealthCare
No. 1
GfK HealthCare
GPI Kommunikationsforschung
GfK_33
34_GfK
Italy:
Bridging world cultural heritage and
corporate globalization
Italy
Italy continues to be a dream destination for travelers from every corner of the world. But like all
GfK SPECIAL
other countries, the home of the Roman Empire, the Renaissance and Rossini has had to face up to
the political and economic reality of the 21st century. Here, market researchers share their insight
into the life and habits of modern Italians.
For centuries, crowds of writers and artists, musicians,
sculptors, journalists and columnists from across the
globe have led the way to this magnificent country
that is defined by the peaks of the Dolomites in the
North and Sicily’s Capo delle Correnti in the South.
People come here to seek the spiritual and cultural
soul of Europe, admire the most exquisite pieces of
art, or simply in search of happiness.
“I can truthfully say only in Rome did I feel what
it is to be a human being. Never since, have I felt
these dizzy heights, this joyous sensation,” said
Johann Wolfgang von Goethe, Germany’s most
famous traveler to Italy. It is in Verona that Romeo
and Juliet find their short but perfect happiness
and enter world literature. The quick-witted Mark
Twain expressed some simple truths in his The
Innocents Abroad: “I would like to remain here.
I had rather not go any further.”
over centuries. The country has traces and precious
proof of the wealthiest and most prolific movements
in the history of European and Mediterranean art.”
Italy
58.5 million people in an area of 301,000 km2.
Population density
194 per km2. Rome 1,987 per km2, Milan
7,500 km2, Naples 8,486 km2.
Per capita gdp/
disposable income
eur 17,500/eur 15,800.
41.8/2.6.
Reducing unemployment is the number one priority for Italians. 38% say this
is their greatest concern, compared to 81% of Germans and a European average
of 37%.
A rich heritage of art and design
34% say they are worried about terrorism, as against 34% in the us, 37 % in
Russia, and an international average of 23%.
No other country boasts as many Unesco world
heritage sites of cultural and natural beauty as Italy –
a comparatively small country with a surface area of
less than 300,000 km2. Concentrated in such a limited
space are 42 such sites. In total, 812 monuments in
137 countries across the world have been given the
much sought after Unesco recognition.
25% are concerned about price and purchasing power trends, compared to a
European average of 15%.
“Italy is in the fortunate and privileged position of
having inherited an extraordinary and immense
wealth of cultural and historical value, accumulated
Italians work an average of 21.5 hours a week, well below the international
average of 23.8 hours.
63% say quality is the most important criterion when buying food. The
international average is only 46%.
9% say they are very happy, compared to an international average of 20 %.
Only 7% say that luxury and a second car are important to them. The
international average is 19%, and the us figure is 25%.
study, Roper Reports Worldwide, GfK Regional Research
The quality of food is more important to Italians than to any other European nation.
GfK_35
»Italy is in the fortunate and privileged position of having inherited
an extraordinary and immense wealth of cultural and historical value,
accumulated over centuries.«
These were the words of Giovanna Melandri, Italy’s
Minister of Culture and Sport until 2001, in an article
for Germany’s Die Zeit weekly newspaper, in which
she went on to admonish that this rich cultural heritage
must not be squandered.
Italians have also championed modern product
design and become world-renowned for it. The
Design Dictionary Italy states that “design has
become synonymous with Italy”. Furthermore:
“No other country boasts anywhere near as many
designers and designs in such a small region. And
nowhere else are there as many companies that
have pursued their designs unswervingly, in many
cases over several decades.” The Museum of Modern
Art in New York described Italian design as a global
force originating from a country whose culture has
always been based on the pursuit and tradition of
the beaux arts and sophisticated craftsmanship. Italy
is also the foremost contender in the global fashion
arena, with fashion houses such as Versace, Ferré,
Gucci, Armani and Prada flying the flag for this
country.
Italians are non-conformists
Italian culture largely forms the self image and
collective identity of this nation, but equally
influential are the sharing of a common set of
values, family and region of origin. Market and
opinion researchers come across these correlations
over and over again in their work.
In the 21st century, an era of collaboration on
developing the European Union, the collective values
of the different nations only vary in terms of their
weighting. Almost all Europeans agree on the subject of individuality. 90% of Italians are opposed to
conformity of any kind and want to stay true to themselves. In Germany, 86% expressed this opinion.
These are the results of a European study carried out
by GfK Lebensstilforschung (Lifestyle Research)
which included questions about “life” and “wealth”.
Post-materialistic values such as cultivating their
individuality was more important to 73 % of Italians
than earning a lot of money.
Mastering the challenges of globalization
The day-to-day problems of Italians are not dissimilar
to those of their European neighbors. According to
the “Challenges of Europe” GfK survey, unemployment,
huge price increases and the “feeling of having little
purchasing power” are shared concerns. As a result
bargains are becoming increasingly popular with
Italians, accompanied by a boom in retail brands.
At the same time, consumer spending is decreasing.
In Italy, the clear divide between the wealthy north
of the country and the predominantly poor south, or
mezzogiorno, persists with politicians failing to close
the gap.
Italy largely faces the same challenges that
globalization produces for all traditional
industrialized nations. The Italy of the days of
Goethe or Twain has long paid its dues to
modernization. German journalist Joachim Fest
wrote reassuringly: “To the outside world it
may seem as though Italy has been harder hit
by the devastation of our age than other countries.
But as if by miracle, or perhaps merit, the country
has succeeded in retaining its soul.”Roma Eterna
and Italy’s eternal monuments with European flair
will continue to attract visitors from all corners of
the world who trust in the wisdom Georg Christoph
Lichtenberg put into words: “No matter how old,
knowledgeable, wise and sophisticated you are, a
journey to Italy will always provide inspiration for
mind and spirit.”
Very few Italians believe that luxury and fashion are important to their quality of life.
36_GfK
GfK_37
GfK SPECIAL
Italy
Western and Southern Europe:
The regional number 1
38_GfK
The Group has also begun measuring
Belgian radio station and program
reaches for cim, the radio research
committee. It began using Mediawatch
technology, used to electronically
measure radio audiences, in October
2005.
GfK is bidding for the electronic radio
ratings contract in uk using the
GfK Radiometer, and this technology
is on a shortlist of three for a radio
research contract in the United States.
It was here that GfK began its international
expansion in 1960 by establishing a
subsidiary in Austria. In the late 1970s, it
set up further companies in the Netherlands, France and Switzerland. Today, it
is the leading market research company
in Germany, the Netherlands, Austria
and Switzerland, the second largest in
Belgium and Italy (since 2002), and the
third or fourth largest in France, Greece,
Italy and Portugal.
GfK’s Retail and Technology and Media
divisions are the regional market leaders,
with continuous tv and radio audience
research contracts in Belgium, France,
the Netherlands and Switzerland. The
electronic measuring technology used
in this type of media research was
developed by GfK subsidiary Telecontrol,
while more recently GfK Eurisko created a
similar tool for measuring radio audiences
electronically.
The custom research company GfK cbi
is being incorporated into the newly
consolidated GfK Eurisko, making
GfK Italy’s leading custom research
provider.
GfK initially acquired 33 % of the Swiss
pharmaceutical research company
GfK Research Matters, which specializes
in custom and tracking studies of cancer
medication and therapy. Since January 1,
2006, the Group has owned 88 % of this
company.
On average, Italians work 2 hours per week less than other
Europeans, North Americans and the Japanese.
Market
rating
Belgium
No. 2
Selected
companies
GfK Audimetrie
GfK Benelux Marketing Services
Division Belgium
Significant GfK
France
No. 4
audimedia
GfK Marketing Services France
GfK Custom Research France
ifr France, m2A, MarketingScan
Greece
No. 3
GfK Market Analysis
Italy
No. 3
GfK Eurisko, iha Italia
Netherlands
No. 1
GfK Benelux Marketing Services
GfK Marketing Services Italia
GfK Panelservices Benelux
Intomart GfK
Austria
No. 1
fessel-GfK Institut für
Marktforschung
mmo Media-Market-Observer
Portugal
No. 3
Switzerland
No. 1
GfK Portugal Marketing Services
Intercampus, Metris GfK
iha-GfK, Telecontrol
GfK Research Matters
Spain
No. 5
GfK emer Ad Hoc Research
GfK Marketing Services España
Business divisions
Custom Research
Media
HealthCare
Consumer Tracking
GfK_39
GfK SPECIAL
For the first time ever, the Western
and Southern Europe region exceeded
GfK’s home country, Germany, in terms
of sales and number of employees. This
was mainly because the nop World
acquisition meant that the Italian
company GfK Eurisko was added to
the regional network.
40_GfK
UK:
Black humor and living for the present
UK
Ascot and the Royal Family, Big Ben and Tower Bridge, raincoats and umbrellas, Guinness and
GfK SPECIAL
afternoon tea are not the only elements of what is considered “very British”. The most famous,
perhaps, is black humor. The uk lifestyle, which is measured by a scale of personal and consumerbased values, differs in fact from that of the rest of Europe. Yet the effects of globalization are
even being felt in the uk.
Having a sense of humor means looking on the bright
side. But sometimes it seems that travelers to the uk
lose their sense of humor. A short, sharp example of
British humor:
Patient to doctor:
Doctor, how long have I got?
Doctor: 10.
Patient: 10 what? Days? Weeks? Years?
Doctor: 9 ...
The British sense of humor is a brand with a long
tradition. Her Britannic Majesty’s government even
goes to the trouble of including a reference on its
ambassadorial webpage. Trouble indeed: “The British
sense of humour is often a source of mystification
for other nations, and visitors to Britain may claim
that our humour is incomprehensible.” But what is
typical British humor exactly? According to British
government experts, it is a particular attitude of
mind which accentuates the absurd, the offbeat
and even the grotesque. They continue to describe
it a national virtue: “Possessing ‘a sense of humour’
is usually regarded as a favourite virtue of the
British.”
Of course, the fact that this very specific virtue has a
long and glorious history should not go unmentioned.
As a tax collector in the Port of London, Geoffrey
Chaucer (1340 –1400) was very well-informed about
his fellow citizens. In his famous Canterbury Tales,
he introduced “smutty slapstick humor” to the
canon of world literature. The next biggest literary
giant of all time after Homer was William Shakespeare,
who left his own lasting impression on British humor.
Society with high purchasing power
Having a sense of humor means looking on the
bright side. Yet the majority of Brits are not among
the world’s happiest people. In a survey carried out
in the uk by GfK nop on quality of life satisfaction,
the findings were that just under one third professed
to be “very happy”. In Australia, a member of the
Commonwealth since 1931, the figure was 46 %,
followed by the usa with 40 %. However, Britons
remain far above the international average of 20 %.
The uk has a population of around 60 million, of
whom just over 50 million live in England, almost
3 million in Wales, 5.1 million in Scotland and
1.7 million in Northern Ireland. The social structure
of the population is clearly divided. The 2005 GfK
European Consumer Study recorded the “typical
social divisions of a class society, with a lower
working class representing 26 % of the population
and the middle class and above accounting for
20 %.”
One third of Britons would say they were very happy – far more than other Europeans.
GfK_41
»Unlike in most other countries in Europe, in the uk unemployment
is not currently an important subject.«
However, uk consumers are still among those with
the greatest purchasing power in Europe. With
exchange-adjusted purchasing power of 17,700 euros,
the Brits are in fifth place in the European league
table. The fact that the uk’s capital city, London, is
Europe’s major financial market place contributes
significantly to the uk’s high purchasing power. All
the big international banks are represented there,
and this also applies to insurance companies, major
management consultants, accountants and auditors
and lawyers. The British are also successful in global
high-tech industries such as telecommunications, it,
biotechnology, chemicals and pharmaceuticals, as
well as automotive and electronics.
uk
Some 60 million people, living in an area of
243,000 km2. 88% live in urban areas.
Population density
247 per km2.
London: 4,700 per km2.
Per capita gdp/
disposable income
eur 21,5000/eur 17,700.
41.8/2.4.
42 % of Britons say crime is their country’s biggest problem, compared
to a European average of 13 %.
32 % say they are very concerned about the health service, whereas the
European average is 14 %.
39 % describe sightseeing as one of their three favorite vacation activities.
The international average is 32 %.
48 % visit a bar or pub once a week, as against an international average
of 22 %.
11 % go clubbing at least once a week. The international average
is 5 %.
32 % describe themselves as very happy. The international average
is 20 %.
58 % say having control over their own lives is most important to them,
compared to an international average of 47 %.
study, Roper Reports Worldwide, GfK Regional Research.
Unlike in most other countries in Europe, in the uk
unemployment is not currently an important subject.
According to the “Challenges of Europe” GfK survey,
only 4 % of the population are worried about
unemployment at the moment. Of the nine countries
surveyed, the uk is by far the least exercised by
unemployment. In comparison, 81% of responses
constitute dramatic evidence that the subject of
unemployment is clearly at the top of the current list
of German worries.
Featuring at the top of the British list of worries are
completely different concerns from those expressed
by the majority of other European countries. The
Brits worry less about finances and more about social
problems: the growing crime rate, an inefficient health
system, immigration from former colonies and eu
countries, the tax system and education.
The majority are easy going
As consumers, above all, the Brits want to stay true
to themselves: rated by 89 %, individuality is given
top priority. In the post-materialistic “cult of the
individual”, with 68 %, the British have given a
distinct thumbs down to “earning a lot of money”.
With 70 % saying they prefer to play it safe than
to go in for risks, the “Consumers in Central and
Eastern Europe” study conducted by GfK-Lebensstilforschung (Lifestyle Research) also shows a high
level of living for the present: 74 % “take things as
they come”, 65 % “are enjoying life here and now”
and “don’t think about tomorrow”. This reflects
the fact that 65 % of Brits are less career and more
leisure minded, believing that leisure time is more
important than a high salary.
British consumers consider quality to be more
important than price. There is no demand for “instant
gratification” and bargain goods, which emphasizes
an element of loyalty to the inherently British lifestyle. Raincoats and umbrellas have never gone out
of fashion in the uk. How very British!
Like most of their Western and Southern European neighbors, the majority of Britons feel that leisure is more
important than a career.
42_GfK
GfK_43
GfK SPECIAL
UK
Northern Europe:
On course for expansion
GfK’s business in Northern Europe
expanded particularly strongly in 2005,
mainly as a result of the nop World
acquisition. The Group became one of
the biggest market research companies
in Britain, which is Europe’s biggest
market and the second largest in the
world. GfK nop, which incorporates
the business of GfK Martin Hamblin,
GfK Media and GfK Marketing
Services, ranks second in the uk
overall.
Sweden was the first country in
Northern Europe which GfK used
as a platform to expand its international network. GfK Sverige was
established in 1981 following the
44_GfK
launch of companies in Denmark and
Norway. Today, studies in Estonia,
Finland and Lithuania are carried out
from Sweden, while studies are carried
out in Ireland from the uk.
GfK’s operations under the GfK nop
umbrella were reorganized. Following
the integration of GfK Martin Hamblin
and GfK Media, GfK nop’s services are
provided by three divisions: Custom
Research, Media and HealthCare.
GfK Sverige’s consumer climate survey
contract with Sweden’s National Institute
for Economic Research has been extended
by a further three years.
Market
rating
Selected
companies
Denmark
No. 3
GfK Danmark
Finland
–
GfK Marketing Services Nordic
uk
No. 2
GfK nop
GfK Animal Health uk
Norway
No. 10
GfK Norge
Sweden
No. 4
GfK Sverige
Business divisions
Custom Research
Media
HealthCare
Consumer Tracking
Northern Europe
A new contract began with itv, the uk’s
largest tv broadcaster, to carry out data
collection in a survey of 5,000 adults,
similar to that carried out for the bbc.
Northern Europe
Britons believe that
being in control contributes to
a good quality of life.
GfK SPECIAL
GfK Media has begun a three-year
project for the bbc to measure the
popularity and acceptance of radio and
television programs. Each day, 15,000
adults and 1,500 four to fifteen-yearolds are surveyed in the largest custom
media research project of its kind in
the uk.
Awards
At the Automotive Conference 2006 in
Lausanne, Switzerland, organized by
international market research association,
esomar, GfK nop uk won the Best Paper
award.
GfK_45
46_GfK
Russia:
From socialist state to modern market economy
Russia
Since the Russian Federation, or the Rossiskaja Federacija, took the plunge into the market
economy, fast and furious developments have happened in Russia, with all the attendant social
GfK SPECIAL
and economic implications of a change of such epic proportions. Despite this, Russia is fast
becoming a major market for western companies and consequently, professional market and
opinion research has become an important marketing tool.
Even in the unsentimental world of business, the
merest mention of business in relation to Russia
often prompts a quotation from the romantic poet
and friend of Heinrich Heine, Fyodor Tyutchev
(1803–1873), which roughly translates as “Don’t
try to understand Russia, just believe in it.” But
bosses know that simply believing is not enough to
be economically successful in Russia. It is essential
to know as much as possible about the people of
this vast country.
Covering over 17 million km2, the country is almost
twice as large as the usa. More than 145 million
people live here (usa: 296 million), of whom two
thirds live in the European area. Almost 80% are
Russian nationals while the rest of the population
consists of over 100 minority nationalities. There
are dramatic economic differences between the
capital Moscow and its suburbs, home to around
16.8 million citizens, and the country’s 88 other
regions. Almost three quarters of the country’s
capital is concentrated in and around Moscow
and almost all large corporations have their offices
on the banks of the Moskva. The current gdp
stands at around 380 billion euros. Russia is
expecting an increase in gdp of 5 % for 2005.
As a comparison, gdp in 2004 for the usa, the single
most powerful economy, stood at 8.621 billion
euros.
Russia
Around 145 million people live in an area of
17,075,000 km2. 74% live in urban areas.
Population density
8,5 per km2.
Moscow: 9,485 per km2.
Per capita gdp/
disposable income
eur 1,800/eur 1,400.
38.2/2.8.
39% of Russians are worried about not having enough money to pay their
bills, compared to 25% of Italians and an international average of 30%.
32% are concerned about price and purchasing-power trends, compared to
the European average of 20%.
25% are concerned about their housing situation. The international average is
11%.
With an average working week of 27.8 hours, the Russians are well above the
international average of 23.8 hours and the Italian figure of 21.5 hours.
42% spend their vacations at home. The international average is 19%.
26% enjoy reading when on vacation, compared to an international average
of 15%.
Only 6% describe themselves as very happy, whereas the international average
is 20%.
53% say that having an interesting job is the most important quality of life
indicator, compared to an international average of 46%.
study, Roper Reports Worldwide, GfK Regional Research
A particularly large proportion of Russians say they don’t have enough money to live on and pay their bills.
GfK_47
» The fact of having to cope with many more products,
services, individual brands and brand groups has quickly led to the creation
of a modern consumer group.«
Consumption in the land of poets, thinkers
and composers
Russia, like Germany, is a land of poets, thinkers
and composers, honored and valued by citizens.
It is therefore to be expected that culture and
education are rated very highly. Value systems,
religion and philosophy are popular topics of conversation, however, it is no longer only spiritual
fulfillment that Russians strive for. After many
years of going without, according to GfK market
researchers, consumption has now become a
channel for self fulfillment, along with the search
for personal individuality. Russians demand higher
functionality from the products they buy, but they
also seek an emotional element. The fact of having
to cope with many more products, services,
individual brands and brand groups has quickly
led to the creation of a modern consumer group.
A multitude of consumer types
As with consumers in the west, Russian consumers
cannot be pigeonholed. GfK rus has, in fact,
identified seven types of consumers among the
Russian population.
With 18%, the “settled” consumers account for
the largest group. These people believe reliability
and quality are the most important. They are not
particularly interested in innovation and tend to go
for established brands, although they are price
conscious. The second place is shared by the
“demanding” consumers and “traditional consumers”,
each with 17 %. For the group of demanding
consumers, prestige is more important than
reliability and quality. They are attracted by
innovation and have above-average susceptibility
to media influence. The “traditional” consumers,
on the other hand, like tried and trusted products,
but have little concern for quality. They prefer to
shop in the old shops of the Soviet era and like to
stock up on goods. This group mainly comprises
older men and pensioners and generally has a below
average income.
In third place with 16 %, the GfK researchers
have discovered the “innovative” consumers.
The innovative consumers are quick to embrace
the new. They also devote a lot of time to leisure
activities and spend a great deal on health and
social status.
With 13%, the next group comprises the “self
realized” consumers. They have mostly fulfilled
their consumer needs. Very conservative in their
consumer behavior, this group has little interest in
new things. The “spontaneous” consumers with
12% and the “thrifty” consumers with 7% bring up
the rear of the Russian consumer typology.
A mix of old and new ideals
In the rapid swing towards a modern market economy,
the people of Russia have kept their values which, as
a consequence of the years of alliance, are identical
in many ways to those of Eastern Europe. These
values mainly include puritanism, family focus and
individuality.
Perhaps the Russians interpret the concept of
individuality differently from consumers in other
countries which have been veering more towards
the American way of life since the end of the
Second World War. Dr. Yevgeny Yasin, economist
and Russian Minister of Finance from 1994 to
1997, points out that in Russia, the significance of
community has a long tradition in which modern
individualists still believe. Collectivity remains
a central bond and will clearly never quite be
overcome by the desire for self realization.
There is still a great deal to learn about Russia.
Even the experts have not ventured to speculate
on whether Fyodor Tyutchev’s thoughts on
“unfathomable Russia” will be consigned to
literary history anytime soon.
Russians are more likely to stay at home during their vacations and are also more likely
to read for enjoyment than their European and American counterparts.
48_GfK
GfK_49
GfK SPECIAL
Russia
Central and Eastern Europe:
Early presence pays off
50_GfK
Today, GfK is the biggest market
research company in Romania,
Slovakia, Slovenia and the Ukraine;
the second largest in Bulgaria,
Croatia, Russia, the Czech Republic
and Turkey; and ranks third or fourth
in Bosnia-Herzegovina, Poland,
Serbia and Montenegro, and Hungary.
The newly established GfK Kazakhstan
has launched its Custom Research and
Consumer Tracking operations.
GfK Polonia celebrated its 15th
anniversary with a client conference
and gala event, while employees and
clients of GfK-rus will be celebrating
its 15th year in the first half of 2006.
Baltic Rim:
Market
rating
Selected
companies
–
GfK Marketing Services Nordic
No. 3
GfK Bosnia Herzegowina
Estonia,
Latvia,
Lithuania
Bosnia-
GfK was among the first to move into
this region. The Group opened its first
office there before the fall of the iron
curtain in 1989, in the form of GfK
Hungária. This was only the second
foreign-owned company of any kind
to be established in Hungary, and
was followed in rapid succession by
GfK Polonia in Warsaw, GfK Praha
in the Czech Republic and GfK-rus
in Russia. The region now comprises
20 companies in 16 countries.
Herzegovina
A market research course was
established at the Higher School of
Economics in Moscow, thanks to the
initiative and cooperation of GfK-rus.
Awards
GfK Belgrade has won the Coca-Cola
Company’s Strategic Consumer
Insights award for excellence in
marketing consultancy.
Russia’s consumer protection
association has granted an award
to GfK-rus for its outstanding
contribution to the creation of a
modern consumer market.
GfK Praha and GfK Slovakia won
Golden Ducat awards at the Czech
business summit for their services
to industry and retail.
Bulgaria
No. 2
GfK-Bulgaria
Kazakhstan
–
GfK Kazakhstan
Croatia
No. 2
GfK Croatia
Poland
No. 3
GfK Polonia
Romania
No. 1
GfK Romania
Russia
No. 2
GfK-rus
Serbia and
No. 4
GfK Belgrade
Slovakia
No. 1
GfK Slovakia
Slovenia
No. 1
GfK Gral-Iteo
Czech Republic
No. 2
GfK Praha
GfK SPECIAL
Fifteen years ago, Central and Eastern
Europe were a terra incognita for many
in the west. While the gap between
east and west has narrowed since then,
the effects of decades of separation are
still apparent. As global corporations
established a strong presence in the
region and their local competitors made
immediate efforts to adapt to the new
market situation, the market research
sector inevitably expanded.
Montenegro
incoma Research
incoma Consult
Turkey
No. 2
GfK Türkiye
Ukraine
No. 1
GfK Ukraine
Hungary
No. 3
GfK Hungária
Business divisions
Custom Research
Media
HealthCare
Consumer Tracking
The majority of Russians say an interesting job
is important to them.
GfK_51
52_GfK
USA:
Freedom of choice and consumer enthusiasm
USA
The unreserved belief in individualism has made the United States of America the most dominant
GfK SPECIAL
political and economic superpower and has raised consumption to a central position within the
commonly held set of values. Consumption is paramount to American consumers, whatever their
ethnic differences.
The Americans are world champion consumers.
According to the us Census Bureau, an average
household spends over 1,200 euros per week, and
not just on fast moving consumer goods. According
to Peter Francese’s article in the trade magazine,
Advertising Age, Americans would rather spend any
spare money than save it. They shop because they
enjoy it.
Consumption in the usa is about more than just
shopping. It is a manifestation of the basic right
to life, freedom and happiness, as promised to all
citizens in the United States Declaration of Independence. This apparently everyday activity reflects
elements of a collective American identity which is
usually hard to define in a culture with such ethnic
and religious diversities.
American identity based on freedom
of choice
In most societies, the common history and the
common religion are what form the basis of the
collective understanding among citizens. The
American identity, however, is cut from an entirely
different cloth. For many, America is still the land
of endless opportunity, the country where everyone
is in control of their own destiny, and could go
from washing dishes to becoming a millionaire.
Regardless of which religion or community you
belong to and whether you were born in this country
or not, the crucial fact is that you have freely made
the decision to be an American. According to Marc
Pachter, Head of the National Portrait Gallery of the
Smithsonian Institute in Washington d.c., this right
to freedom of choice embodies the central dynamic
and the actual value of society as a whole. It bridges
all the cultural differences in this most traditional
of immigrant countries. The belief in the opportunity
of striving for a better life is also a prominent feature
of any consumer culture.
Consumer enthusiasm strengthens
the economy
With their passion for consumption, Americans
make a considerable contribution to their national
economy, which produces around a fifth of global
income. gdp is around three times higher than in
Japan, which holds second place in world rankings,
and around five times higher than Germany, in
third place. The us service sector makes the most
prominent contribution – another fundamental
basis for the country’s economic power, which
puts the significance of the formerly domineering
manufacturing industry sharply into perspective.
Today, 296 million inhabitants live on almost
9.9 million square kilometers. 63 million people
arrived in America between 1820 and the end
of the 20th century alone. Of those, over seven
million were German, over five million were British
and over five million were Italian. At 14%, Latin
Americans are now the largest ethnic minority within
the population. In 2000, they overtook the African
Americans and Australians are more likely than any other nationality to describe themselves as very happy.
GfK_53
»The belief in the opportunity of striving for a better life
is also a prominent feature of any consumer culture.«
Americans, who are currently Number 2 with 13%.
White Americans currently account for almost 70 %
of the us population.
The population consists of 112 million households,
which mainly comprise the traditional family
structure of parents plus one or two children. 85 %
of Americans over 25 have a high school diploma, 53%
have been to university and 36 % have graduated
from university. The average net household income
is around 36,600 euros. Here, the gap between rich
USA
296 million in an area of 9,931,000 km2.
Of these, 77% live in urban areas.
Population density
30 per km2. Los Angeles 3,004 per km2,
New York 10,359 per km2, Manhattan 25,835
per km2.
Per capita gdp/
disposable income
eur 31,700/eur 24,600.
36.3/2.6.
and poor is not as pronounced as in Russia or China,
but statistics show that 20 % of households earn
50 % of the country’s total income and the lowest
20 %, just 3 %.
The American dream lives on
So how much are traditional values such as
the American dream or the ‘right to the pursuit
of happiness’, quoted in the Declaration of
Independence, still relevant today? The survey
results are clear: the vast majority of Americans,
almost 80 %, still firmly believe in the American
dream. 55 % believe they are on their way
to fulfillment and 10 % say they have already
achieved it.
In matters of attitude to life and personal circumstances, it appears that despite some unifying ideals,
rifts have emerged within the population which
challenge the concept of the American dream, such
as the issue of the current financial situation of
consumers: 21% of whites claimed to simply “live
from day to day”, compared with 33 % of African
Americans and 38 % of Latin Americans.
37 % of Americans are concerned about not having enough money to live on,
a figure exceeded only by Russians, at 39%. The international average is 30%.
The us, Canada and Australia are the only oecd countries with negative savings
ratios.
Americans spend more of their waking hours with their spouses than any other
nationality, at 27.7 hours a week compared to the international average of 23.4
hours.
They also watch more tv than people in any other country: 19 hours a week,
compared to an international average of 16.6 hours.
They are also more likely to describe themselves as very happy than people in any
other country. 40% say this is true of them, while the international average is 20%.
72 % say owning their own home is important to them, compared to an
international average of 60%.
Sources: Roper Reports Worldwide, GfK Regional Research
Although the consumer culture is often a contentious
issue, the fact remains that it is part of the innate
sense of American national pride. No other than Andy
Warhol, icon of American pop culture, once pinpointed the roots of this: “What’s great about this
country is that America started the tradition where
the richest consumers buy essentially the same things
as the poorest.” This was echoed only recently by
an l.a. Times columnist’s opinion that it is easy to
criticize the American consumer culture, but we
should not overlook the fact that it was precisely
those loyal American consumers that carried the
American economy through the burst of the dotcom
bubble, 9/11 and a series of major hurricanes.
Shopping and consuming are a passion in the United States, which is one of the few countries with a negative savings rate.
54_GfK
GfK_55
GfK SPECIAL
USA
America:
In the league of the top ten companies
Barely seven years ago, GfK had no
presence in America – in the United
States, which has the world’s biggest
marketing and market research
industries. This has radically changed:
the Group now has around 1,250
employees in 10 countries and a
presence in North and South America.
Following the integration of the
nop World companies, GfK became the
eighth largest company in the sector
in 2006.
The Group came one step closer to its
long-held aim of gaining a foothold in
the us with its flotation in September
1999. In the same year, GfK Custom
Research became the Group’s first us
research company. This was followed
in 2003 by v2 GfK and a year later by
GfK Arbor.
However, the most important step in
GfK’s us business development strategy
was the acquisition of nop World in
April 2005. This means that all of its
divisions except Consumer Tracking
now have a us presence.
As part of the integration and
reorganization of the nop World
subsidiaries in the usa, GfK nop
Custom Research and GfK Automotive,
the world’s leading automobile research
specialist, are now incorporated in
the Custom Research division.
Together with the newly acquired
majority interest in GfK Research
Dynamics, Canada, GfK cri and GfK
Arbor, these businesses have been
combined as GfK Custom Research
North America.
The acquisition of nop World has
also proved a strategic success in the
HealthCare division. Since GfK v2 and
the former nop companies, GfK Market
Measures and GfK Strategic Marketing,
were grouped together under the
name of GfK us Healthcare Companies,
GfK has been the world’s leading
specialist in custom pharmaceutical
research.
56_GfK
The us company Mediamark Research,
another new member of the GfK
network and a leading force in the
media research market with its print
circulation surveys, was one of three
companies shortlisted for a us radio
ratings contract.
GfK Equity Research and GfK Audits
and Surveys, which provide services
in the Retail and Technology division
in the usa, launched operations.
GfK also has set up networks in 8 Latin
American countries.
GfK SPECIAL
America
More than one in three Americans
is worried about not having enough money
to live on and pay their bills.
America
Market
rating
Selected
companies
Argentina
–
GfK Kleiman Sygnos
Bolivia
–
Adimark GfK
Brazil
No. 4
GfK Indicator
Chile
No. 1 (Custom Adimark GfK
Research)
GfK Chile Marketing Services
Ecuador
–
Merc GfK
Canada
No. 14
GfK Research Dynamics
Colombia
–
Merc GfK
Mexico
No. 13
Merc GfK
Paraguay
–
GfK Kleiman Sygnos
Peru
–
Adimark GfK
usa
No. 8
GfK nop Custom Research,
GfK Automotive,
GfK Custom Research, GfK arbor,
GfK Audits & Surveys, GfK Equity Research,
Mediamark Research,
GfK us Health Companies:
GfK v2, GfK Market Measures,
Venezuela
–
Merc GfK
Business divisions
Custom Research
Media
HealthCare
Consumer Tracking
GfK_57
58_GfK
Japan:
Cultural tradition and economic power
Japan is back in the select circle of booming economies. The characteristic hallmark of this
Japan
“rich, mature market” is the demanding consumer, with individual peculiarities. In the highly
Japan has proved its economic capacity time and
again. At the moment, after years of recession and
stagnation, the country is right back at the top of
the league of booming economies. The Confederation
of German Industry (bdi) confirmed: “Japan is the
biggest market in Asia, with by far the greatest
purchasing power.” By way of evidence, it points
out that personal savings in the land of the rising
sun amount to 9.4 billion euros. With the second
highest gdp in the world, after the usa and ahead
of Germany, Japan represents a “huge, rich market,”
as the Japan External Trade Organization (jetro)
surmises. But it is also “a demanding and mature
market.”
entrenched traditions have merged with an extraordinary openness to current international trends
to forge a highly idiosyncratic outlook. On the other,
these most demanding of consumers are willing to
accept only top quality products and customer services
However, this is not representative of Japan as a
whole. Even the well respected Hamburg-based
anthropologist, Professor Dr. Wulf Köpke is amazed
after a visit to the country: “This spontaneous,
boisterous humor which many Japanese are now
displaying is an entirely new experience for me.
I fear that they all too often leave it at home when
they travel abroad, but in the country itself, I felt its
full impact,” the great man recorded in 1999 in the
information leaflet of the Japanese General Consulate
in Hamburg after his first trip to Japan.
Japanese open to challenges
GfK SPECIAL
modern media and information age of Japan, cultural traditions are still very much alive.
Japan
Population
127 million in an area of 378,000 km2.
Population density
342 per km2.
Tokyo: 13,650 per km2.
Per capita gdp/
disposable income
eur 30,500/eur 11,200.
42.6/2.7.
Only 23 % of Japanese citizens expect their finances to improve in the
future, compared to an international average of 59 % and a us figure
of 68 %.
62% are concerned about crime, whereas the international average is 45 %.
34% say the environment is one of the most important problems, compared
to an international average of 21%.
32% are concerned about mistakes made by the government, as against
an international average of 18% and a uk figure of only 7%.
Japanese people spend more time with their children and grandchildren,
at 16.9 hours a week compared to an international average of 15.2 hours.
Only 4% describe themselves as very happy. The international average is 20%.
Such impressions are hard to find in descriptions
of Japan. More often, the talk is of the enigmatic
Japanese and their culture. Indeed, it is not only the
soul of the population of around 127 million of this
island nation consisting of 3,922 islands, which is
proving mysterious. On the one hand, the firmly
72% say spiritual enrichment is important to them, compared to an international
average of 36%.
However, only 37% believe that owning their own home is important; the
international average is 60%.
Sources: Roper Reports Worldwide, GfK Regional Research
The Japanese spend more time with their children and grandchildren than Europeans and Americans.
GfK_59
» In Germany, the pressure to reform comes mainly from countries with low production
costs, whereas in Japan, there is a more innate grasp of the impact of factors
such as China and globalization and a willingness to adapt to the new situation.«
which do not simply pay lip service to the term
“customer satisfaction” for advertising purposes,
but where the concept constitutes a corporate
philosophy in practical daily use.
Marketing strategists can make good use of the
highly developed national infrastructure, from
transport through to retail organization, the low
rate of unemployment and people who, under the
circumstances, are more open to today’s tougher
challenges than their counterparts in other highly
developed industrial nations. According to Martin
Schulz from the Fujitsu Economic Research Institute:
“The Japanese are not just prepared to take tough
measures, they demand them. In Germany, the
pressure to reform comes mainly from countries
with low production costs, whereas in Japan, there
is a more innate grasp of the impact of factors such
as China and globalization and a willingness to adapt
to the new situation.”
The Japanese cultivate an unusually close association
with the media. Japan even has a worldwide reputation
as the land of the mass media. Every day, around
120 newspapers with a combined total circulation
amounting to in excess of 71 million copies are
published, some with circulations European publishers
can only dream about. The circulation density of all
the dailies comprises 647 copies per 1,000 inhabitants
aged 14+. Only Norway and its 651 copies beats Japan
into second place and in the middle comes Germany,
with 313 copies per 1,000 head of population.
However, the electronic media remain firmly in first
place in Japan, as is the case in all countries today,
with 71.5% of respondents saying their favorite leisure
time pastimes were watching tv, listening to the radio,
surfing the net or emailing by computer or cell phone.
The radio and tv landscape is correspondingly diverse.
Some 350 private radio and tv stations are battling
it out alongside public service broadcasters, Nippon
Hoso Kyokai (nhk) for the time and attention of their
fellow nationals.
Global progress of a form of Japanese poetry
Market and opinion researchers concluded that Japan
is quite typical of a modern media and information
society, however, without any compromise of its
uniform cultural identity. The same applies to lifestyle, art, music and literature. Haiku poetry remains
infinitely popular in Japan and is even on the road
to conquering the rest of the world, as the German
Haiku Association confirms. They define the form
as: “Haiku is the shortest acknowledged literary form
of poetry in the world and there is hardly a language
or a country in which haiku is not written and read.
Haiku is the only form of poetry which is cultivated
by so many associations all over the world and it is
the most popular form of poetry on the Internet.”
In Japan, its country of origin, it is by no means
only poets and writers who compose these three-line
offerings, but the entire population: “From emperor
to farmer, from university professor to elementary
school pupil, there is hardly a Japanese person who
has not yet written a poem,” was the claim made 50
years ago in the sophisticated little book: “Full moon
and the sound of the cicadas.” The founder of the
classical haiku movement, Matsuo Bashô (1643 –1694),
the reader is informed, was a lay Zen Buddhist monk.
In an entirely Japanese way and with gentle irony,
almost pre-empting the advent of a busy information
and media era, he managed to distil the brevity of the
human encounter with the infinite nature of time into
just three lines:
Stillness of the pond –
Froglet leaping in from bank –
Ripple in water.
And so with just these few words, questions
concerning the humor and mysteries of the
Japanese soul can be resolved.
Only one in four Japanese people believe that their future financial situation will be better in the future than it is now.
60_GfK
GfK_61
GfK SPECIAL
Japan
Asia and the Pacific:
Untapped market potential
Experts predict that over the next
ten years, an affluent middle class of
around 800 million people will emerge
in Asia – ten times the population of
Germany and 2.7 times that of the
United States. This means that Asia
and the Pacific are well on the way
to becoming the biggest consumer
region in the world.
The marketing and market research
sectors are already benefiting from
this growth, but they have a long
way to go before catching up with the
highly developed western economies.
In 2004, market research in this region
accounted for 13.3 % of global sector
sales. Japan is by far the largest research
market in Asia and the Pacific, followed
by Australia and China.
The GfK Group has been active here
for 20 years, starting in Japan, where it
acquired its first minority interest in
1985. It now has subsidiaries in nearly
all of the region’s key economies,
including Australia and New Zealand.
In 2005, GfK had subsidiaries in 15
countries and although GfK was only
active in the Retail and Technology
division until 2005, it is already the
region’s fifth largest market research
company.
The Group has launched its HealthCare
business in Asia in the form of subsidiaries in Singapore, Hong Kong and
Thailand and the former nop World
company, GfK Healthcare, in China.
It now has a presence in Asia’s key
markets.
62_GfK
GfK Marketing Services China held its
first client conference in Shanghai,
on the theme of convergence and digitalization. This was attended by some 250
representatives of over fifty Chinese and
international retailers and manufacturers.
GfK SPECIAL
Three in four Japanese people
believe that tradition and spiritual development
are important.
Selected companies
Australia
GfK Marketing Services Australia
Oz Toys Marketing Services
Informark
China
GfK Market Research (Shanghai)
GfK Asia (Peking)
GfK HealthCare Asia (China)
Hong Kong
GfK Marketing Services (Hong Kong)
GfK HealthCare Asia (Hong Kong)
Indonesia
GfK Marketing Services Indonesia
Japan
GfK Marketing Services Japan
Encodex Japan
Cambodia
GfK Asia (Cambodia)
Korea
GfK Marketing Services Korea
Malaysia
GfK Marketing Services Malaysia
New Zealand
GfK Marketing Services Australia
Philippines
GfK Asia (Philippines)
Singapore
GfK Asia
GfK HealthCare Asia
Taiwan
Thailand
GfK Marketing Services (Taiwan)
GfK Marketing Services Thailand
GfK HealthCare Asia (Thailand)
Vietnam
GfK Asia (Vietnam)
Business divisions
Custom Research
Media
HealthCare
Consumer Tracking
GfK_63
64_GfK
Management Report of the GfK Group
66
1.1
Overall economic development: growth stabilizes
66
1.2
Market research sector: on the upturn
67
2. Event of the year 2005: acquisition of nop World
69
3. 5 Star Initiative: strategic milestones for the next few years
70
4. Economic and financial development
71
4.1
Introduction
71
4.2
GfK Group: excellent financial year
71
4.3
Business divisions: focusing on consumers and markets
74
4.4
Regions: competence in local markets around the world
79
5. Research and development
83
6. Human Resources
84
7. Organization and administration
86
8. Purchasing
86
9. Environmental protection
86
10. Marketing and corporate communications
87
11. Risks
88
11.1 Basic principles of risk management: an integrated system
88
11.2 Assessing the risk situation: individual risks
89
11.3 Assessment of overall risk
91
12. Major events since the end of the financial year
91
13. Outlook
92
13.1 Macro-economic situation:
robust with slight trend to slowing down
92
13.2 Market research sector: additional potential for growth
92
13.3 Opportunities: further growth through building on achievements
92
13.4 Research and development: pooling expertise
93
13.5 Human Resources:
promoting the integration of the nop World companies
93
13.6 Organization and administration: continuing the streamlining process
93
13.7 Marketing and corporate communications:
harmonizing the websites
93
13.8 Investment and financing: reducing debt
93
13.9 Corporate growth at the GfK Group:
exceeding the 1.1 billion euro sales mark
93
13.10 Divisional trends:
continuing the optimization and integration process
MANAGEMENT REPORT
1. The economy
94
GfK_65
Management Report of the GfK Group
1. The economy
1.1 Overall economic development: growth stabilizes
The global economy continued to develop positively in 2005. The
upturn that began in the previous year was sustained. However,
without any major turbulence being recorded, the speed of global
economic growth slowed from approximately 5% in 2004 to a
good 4 % in 2005. At the same time, prices remained moderate to
a large extent. Inflation rates were just slightly higher than in 2004,
a good 2% in the industrialized countries and 6% in developing
countries and emerging economies.
gdp growth in regions and countries important to GfK1)
2004
20054)
20065)
20075)
1.63)
0.9 3)
1.7
1.2
France
2.1
1.6
2.0
2.2
uk
3.2
1.6
2.3
2.8
Euro-zone
eu 15
2.1
2.3
1.4
1.5
2.1
2.1
1.9
2.1
In %
Germany
eu accession countries
5.1
4.3
4.7
4.6
eu 25
2.4
1.7
2.2
2.2
usa
4.2
3.6
3.4
3.1
Latin America
5.9
4.0
3.5
n.a.
South East Asia
7.9
6.7
7.2
n.a.
China
9.5
9.0
8.2
7.9
Japan
2.6
2.4
2.5
2.5
World2)
5.1
4.6
4.7
4.4
1) Source: diw reports “Grundlinien der Wirtschaftsentwicklung 2006/2007” (baseline of economic development 2006/2007), “Die Lage der Weltwirtschaft und der deutschen Wirtschaft
im Herbst 2005” (state of the global economy and German economy in autumn 2005) and
“Grundlinien der Wirtschaftsentwicklung 2005/2006” (baseline of economic development
2005/2006), based on oecd figures
2) The Euroframe Spring Report 2006
3) Federal Statistical Office, Wiesbaden. After elimination of calendar effects, the gdp growth rate
is 1.1% for both 2004 and 2005.
4) Estimated, except figure for Germany
5) Forecast
Overall, the global economy was in a robust condition as of the end
of 2005. A year ago, many experts assumed that crude oil prices of
over usd 50 would lead to a global recession. Since then, this mark
has been exceeded by far without leaving behind any significant
economic traces.
The crucial difference in comparison with developments after
the oil price shock of the 1970s and 1980s is due to changes
since then in countries’ monetary policy. At that time, the central
banks had already set a restrictive course in monetary policy in
the run-up to the oil price rise. This was to prevent the economy
from overheating and to combat any acceleration of the upsurge
in prices. When the inflation rates increased further as a result
of oil prices, the central banks again raised interest rates
considerably.
66_GfK
The policy of the central banks over the last few years has been
completely different. By the end of 2005, the moderate monetary
policy continued to have a favorable effect on demand. In the
second half of 2004, the central banks began cautiously to tighten
monetary policy, a course which they continued in 2005. Many
countries, especially English-speaking countries, increased
interest rates. However, to date these have remained – both in
nominal and real terms – significantly below the long-term average
interest rate level.
An important reason for the continuation of the global economic
upturn was China’s sustained economic dynamism. On the one
hand, it contributed significantly to the sharp rise in demand
for raw materials and, therefore, to increases in their prices.
At the same time, however, the boom in China and the reinforced
integration of the Chinese economy in the global economy has given
global trade clear impetus. A tenth of the growth in global trade
in the years from 1999 to 2004 is attributable to the expansion of
China’s export trade.
The national economies in regions and countries important to
GfK performed as follows:
In the usa the economy has been very stable over the last two
years. Gross domestic product (gdp) has risen continuously
since spring 2003, though the rate of increase slowed somewhat
in 2005. Growth was recorded at 3.6 % in the financial year
just ended, compared with 4.2 % in the previous year. Private
consumption was particularly growth-enhancing, while the
damage caused by hurricanes in the Caribbean failed to restrict
the region’s positive performance.
In latin america economic growth has been slightly weaker
following strong growth in prior years. However, the economic
situation is still very robust.
Asian countries have ensured that the global economy has
remained strong. After japan experienced an economic recovery in
2004, growth continued in 2005. In particular, exports increased
thanks to positive economic performance in neighboring countries.
Contrary to expectations, the boom in the national economies
of the most populated countries in the world, china and india,
did not slow down in 2005. By contrast, the smaller countries of
south east asia witnessed more of a slowdown in 2005 than
in the prior year – mainly due to the rise in crude oil prices and
the decline in domestic demand. Nevertheless, the region still
recorded an above-average growth rate.
In the member countries of the european union growth in
gdp remained slightly below the prior year’s level. This was
mainly attributable to continued weak economic performance
in the member countries of the european monetary union.
While exports in this region continued to rise sharply, domestic
demand was curbed in particular due to increases in energy
prices. This mainly affected private consumption, but it also
The german economy closed 2005 without any notable upturn.
Economic growth remained below the 1% mark. Unemployment
continued to rise. Domestic demand, especially private consumption, stagnated. Growth in exports alone, which was supported
by the favorable global economic situation, ensured an increase
in gdp.
Consumer climate in Germany:
Stabilization in the second half of the year1)
Month
January
Opinion
trend
Propensity to buy2)
Change
from Consumer
previous
climate
month indicator3)
Change
from
previous
month
– 14.4
+ 7.9
3.4
+ 0.7
– 12.2
+ 2.2
4.4
+ 1.0
– 12.3
– 0.1
4.9
+ 0.5
– 27.1
– 14.8
5.0
+ 0.1
– 21.3
+ 5.8
4.7
– 0.3
– 25.8
– 4.5
4.2
– 0.5
August
Optimism
grows
Recovery
despite growing
skepticism
Uncertainty
spreads to
consumers
Consumer mood
worsens
Uncertainty
remains No. 1
concern
Possible new
election does not
trigger new sense
of optimism
Private consumption remains weak
New confidence
September
Return to
uncertainty
October
Hope for an
economic upturn
Low mood in the
West – optimism
in the East
Consumer climate
has not been as
good as this for a
long time
February
March
April
May
June
July
November
December
This is demonstrated by the results of GfK’s monthly consumer
climate survey. After an initial rise in consumers’ propensity to
buy at the beginning of the year, the indicator dropped towards
the middle of the year, and then gradually began to recover in
the second half of the year.
1.2 Market research sector: on the upturn
The market research sector also profited from the sustained
positive development of the national economies. After having
recorded average annual growth rates of around 10 % in the
1990s, performance stagnated in the first few years of the new
millennium. Since 2003 the sector has recovered, in particular
due to the clear increase in momentum witnessed in the sector
in the usa. After growth of 2.7% in 2003, the sector grew by
5 % in 2004. Experts estimate that the sector grew by between
4 % and 5% in the financial year just ended.
Market share by region
Growth
2003/2004
In %
2003
2004
Europe
eu 15
eu accession countries
Rest of Europe
America
North America
Latin America
Asia/Pacific
43.8
40.1
1.3
2.4
41.5
37.7
3.8
13.3
44.9
41.1
1.4
2.5
40.4
36.5
3.9
13.3
6.7
8.2
5.2
1.3
1.4
6.3
18,928
21,501
5.0
Middle East/Africa
Market research sales
in usd million
3.2
3.0
6.0
6.1
MANAGEMENT REPORT
affected private investments. By contrast, economic development
in the new member countries of the European Union remained
very robust and at times, the economy gained even further
momentum - especially as a result of the continued rise in
foreign demand in these countries.
Source: esomar Industry Study, 2005
– 13.1
+ 12.7
3.6
– 0.6
– 4.5
+ 8.6
3.2
– 0.4
– 13.4
– 8.9
3.2
0.0
– 10.2
+ 3.2
3.3
+ 0.1
– 8.1
+ 2.1
3.5
+ 0.2
+ 2.1
+ 10.2
3.5
0.0
1) These are the findings of the survey, “GfK-Wirtschaftsdienst Konsum- und Sparklima”
(GfK financial services, consumer and savings climate), published by GfK Marktforschung.
The results are based on monthly consumer interviews, which GfK has been carrying out
on behalf of the eu Commission since 1980. In the first half of each month, around 2,000
representatively selected people are asked about their perceptions of the overall economic
situation, their propensity to buy and their income expectations.
2) The consumer confidence or propensity to buy indicator is based on the following
question to consumers: “Do you think it is advisable to make major purchases at the
moment?” (good time – neither good nor bad time – bad time). The values shown
above are deviations from the long-term average value. The historic maximum value
for the whole of Germany is + 36.5 in April 1999, whilst the historic minimum value
is – 55.5 in November 2002.
3) The consumer climate indicator describes private consumption. Key factors are income
expectations and buying propensity. The economic outlook has a more indirect effect on
the consumer climate, generally as a result of income expectations. The historic maximum
value for the indicator was 27.9 in March 1999, whilst the historic minimum value was
– 8.7 in February 1994.
As in previous years, trends in the sector varied widely in the global
regions and individual countries. For example, the sector continued
to grow strongly, especially in the regions Asia and the Pacific, Latin
America, and Central and Eastern Europe. With a growth rate of
7%, compared to 3.3 % in the previous year, the usa also performed positively in 2004. It is estimated that sectoral growth in the
usa and the region North America was just as strong in the
financial year just ended as in 2004. By contrast, growth in the
European Monetary Union was more modest. After 0.7% growth in
2003, market research sales increased by 3 % in 2004. Experts
estimate that sales in this region for 2005 were similarly strong.
GfK_67
Event of the year 2005: acquisition of nop
Market research sector in comparison with gdp and
advertising industry 1) (in %)
Top 10 national market research markets:
sales and share of the sector’s overall sales
100
100
100
1996
112.0
108.1
103.5
1997
123.3
113.7
106.3
1998
133.5
123.7
109.6
1999
138.9
137.5
2000
113.9
142.8
131.6
114.9
2001
149.2
131.3
116.7
2002
153.2
135.2
119.1
2003
160.9
145.2
2004
123.0
168.1
152.4
2005
126.4
Market research
Advertising
gdp
1) Basis: 1996 values = 100 % – for 1996, the 1997 conversion factor for the euro to the us dollar
was used: eur 1 = usd 1.1346
Sources: esomar for market research, Zenith Optimedia 2005/2006 for advertising and
Euroframe 2006 and oecd 2004 for gdp.
In usd million
Sales
2003
Sales
2004
Real
growth
2003/20041)
in %
Share of
sector’s
overall sales
2004 in %2)
usa
6,660
7,319
7.0
34.0
uk
1,997
2,362
2.5
11.0
Germany
1,805
2,084
3.2
9.7
France
1,580
1,836
3.4
8.5
Japan
6.0
1,190
1,294
1.5
Italy
581
671
2.6
3.1
Canada
477
534
2.2
2.5
Spain
395
472
5.4
2.2
Australia
383
456
2.7
2.1
China
306
371
20.0
1.7
Top 10 as a whole
15,374
17,399
–
80.8
World
18,928
21,501
5.0
100.0
1) The growth rates are inflation-adjusted and based on national currencies.
2) Rounding differences may occur.
Among the top 10 market research countries, the per-capita
spending on advertising is particularly high in the usa and uk.
These are followed by Japan, then Germany, Canada and Australia
as well as France. In respect of per-capita spending on market
research, the uk and France are the market leaders, followed by
Germany, the usa and Australia. Spending on market research in
comparison with spending on advertising mainly varies between
5 % and 10 %. The only exception among the world’s ten leading
market research markets is China, which still lags far behind other
countries in respect of its per-capita spending on advertising and
on market research.
Top 10 of the national market research markets: per-capita spending
on advertising and market research
Generally, market research is less affected by economic fluctuations
than the media and advertising industry. This is partly due to
the fact that clients still require continuous research into consumer
habits, retail figures and media reach even in times of slow
economic growth. The advertising industry has now recovered.
According to experts, growth in the advertising industry, recorded
at 5.2% in 2005, was slightly higher than global economic growth
and higher than the estimated growth in the market research
sector.
The largest national market research market is the usa, followed
by the uk, Germany, France and Japan. After the usa, China is
the strongest-growing country of the ten largest national market
research markets. And, taking into account the rate of growth,
China ranks number 3 in the world. Nearly 81% of the sector’s
global business is generated in the ten countries with the strongest
market research sales.
68_GfK
in usd
Per-capita
spending on
advertising
Per-capita
spending
on market
research
Spending on
market research
as % of spending
on advertising
usa
495
25
5.0
uk
410
40
9.7
Germany
246
25
10.3
France
202
31
15.1
Japan
282
10
3.6
Italy
182
12
6.4
Canada
235
17
7.2
Spain
182
11
6.3
Australia
233
23
9.9
18
0
1.5
China
The most important client segment, which generates 46% of
overall market research sales, is the consumer goods industry
(2003: 45 %), followed by the media and agencies operating in the
communications sector, which generate approximately 22% of
overall market research sales and have a growth rate of 10 %.
2. Event of the year 2005: acquisition of nop World
technology and business-to-business research, research on
consumer trends and in mystery shopping.
Top 10 of the market research sector 2005
Company name
Sales
20051)
Growth
in %2)
5.0
1
vnu, Netherlands
3,518.0
2
Taylor Nelson Sofres, uk
1,810.1
5.7
3
ims Health, usa
1,754.8
12.0
4
Kantar Group, uk
1,468.4
8.8
5
GfK Group, Germany
1,160.3
40.13)
6
Ipsos, France
888.6
18.7
7
Synovate, uk
598.8
21.3
8
9
Information Resources, usa4)
Westat, usa4)
598.6
415.7
4.5
4.5
Arbitron, usa
310.0
4.5
10
In the Media division, GfK acquired two market leaders in media
research: Mediamark Research (mri) in the usa and Eurisko in
Italy. mri is the leading provider of print media research in the
usa. Its information on the reach of newspapers and magazines
is regarded as definitive in the usa when it comes to advertising
in print media. The new Italian subsidiary, which has been trading
under the name of GfK Eurisko since October 2005, belongs
in media research to the exclusive circle of providers that have
developed equipment to electronically measure radio reach through
to time-to-market. GfK is number 4 in the world.
With GfK Market Measures and GfK Strategic Marketing, the two
former nop World subsidiaries operating in the HealthCare
division, the GfK Group is now the No. 1 in custom research into
pharmaceuticals worldwide.
2.2. Financing of the acquisition: own and external funds
1) In usd million; conversion rate: eur 1 = usd 1.2379, gbp 1 = usd 1.8119
(annual average 2005)
2) Growth in local currency
3) Consolidation of the former nop World Companies as of June 1, 2005
4) Based on estimated growth in the sector of 4.5%
The purchase price for the nop World companies which were
fully consolidated as of June 1, 2005 was approximately eur 570
million. GfK financed the purchase price using own and external
funds.
GfK has set the course to position itself and advance in the premier
league of market research companies generating sales worth
billions. Moreover, it has significantly strengthened its position in
three of the largest market research markets:
GfK raised external funds via a syndicated credit facility of
eur 530 million and usd 170 million. This has already been
repaid in part and has a term of 5 years. GfK minimized the
interest rate risk associated with the external funds largely
through interest rate hedges.
moving up from 15th to 8th place in the usa, the world’s most
important market for marketing and the market research sector,
from 7th to 2nd place in the uk, the No. 2 in the marketing and
market research sector, and
from 4th to 3rd place in Italy, the sixth largest market in the sector.
As a result of this important step, around 1,570 former nop World
employees are now employed by GfK. With them they bring great
potential in the form of research and market experience and client
contacts.
2.1. Business divisions and local presence: a perfect match
The services provided by the former nop World companies,
especially in the business divisions Custom Research, Media,
HealthCare, and the instruments and services of GfK complement
each other perfectly:
With the new companies, GfK has risen to the sector’s number 5
in Custom Research. In particular, GfK has secured an outstanding
position in the automobile market, due in part to its acquisition
of Allison Fisher International, the world leader in this specialist
market research segment. In addition, GfK has reinforced its
position in the following areas: financial market research,
MANAGEMENT REPORT
On April 14, 2005, the GfK Group signed the contract to acquire
nop World, the No. 9 in the market research sector. This set
the seal on GfK’s most important decision since its ipo in
1999. With the acquisition, the GfK Group has considerably
strengthened its position as the No. 5 among market research
institutes.
In addition, GfK placed 3.15 million shares at a price of eur 28.70
with institutional investors and raised eur 90.3 million. The capital
increase was carried out within the framework of accelerated bookbuilding, excluding subscription rights. This procedure is targeted
directly at institutional investors. The transaction was completed
within a few hours. At the end of the day, the GfK share price was
higher than on the previous day.
2.3 Integration of nop World: on schedule
After the us and German cartel authorities had checked and
approved the company merger, work on the integration of
nop World began on June 1, 2005. For this purpose, GfK formed
project teams made up of managers from GfK and the former nop
World. Their task was to create structures to assist the subsidiaries
of GfK and nop World integrate with each other as quickly and
efficiently as possible, in terms of range of services, production
and administration. The members of the Management Board of
GfK responsible for Custom Research, Media and HealthCare are
responsible for managing the teams. Integration, which has been
pushed ahead intensively, has to date run on schedule.
GfK_69
Strategy for the next few years: 5 Star Initiative
The result of restructuring the entire company network in the usa,
uk and Italy is as follows:
usa: GfK activities in four business divisions
The us subsidiaries active in the Custom Research division are
combined under the GfK Custom Research North America Board.
In addition to GfK arbor, GfK Caribou Lake and GfK cri, this now
covers GfK nop Custom Research and GfK Automotive.
In HealthCare, the two former nop World companies, GfK Market
Measures and GfK Strategic Marketing, are managed, together
with GfK v2, under the GfK us Healthcare Board.
The former nop World company mri operates in the Media
division.
Audits and Surveys, also a former nop World company, was
assigned to the Retail and Technology division. Under the name
GfK Audits and Surveys, the company carries out retail surveys in
the usa.
uk: GfK activities of three business divisions brought together
under GfK nop
The former nop World companies and GfK companies in the
Custom Research, Media and HealthCare divisions were brought
together as GfK nop.
After restructuring, GfK Martin Hamblin was integrated into
the two GfK nop divisions, GfK Custom Research and GfK
HealthCare.
In the Media division, preparations were made to integrate the
nop World division of Print Media Research into GfK Media uk.
Since January 1, 2006 the merged business division has been
operating under the name of GfK nop Media.
GfK Marketing Services, long-established in the Retail and
Technology division, is part of GfK’s uk network of companies.
Italy: consolidation of activities in the Custom Research
division
GfK Eurisko, which originated from the former nop World
network, is active in the divisions of Custom Research, Media
and HealthCare. The business of GfK cbi, an Italian subsidiary
of GfK also assigned to Custom Research, was integrated into
GfK Eurisko.
Moreover, GfK maintains its business interests with GfK iha Italia
in Consumer Tracking and GfK Marketing Services Italia in Retail
and Technology.
70_GfK
3. 5 Star Initiative: strategic milestones for
the next few years
As the No. 5 in the world, GfK is among the leading global market
research companies. Its success is mainly based on the commitment
of its employees, many of whom count among the most capable
people in the sector in respect of knowledge, experience and
creativity. GfK is one of the market leaders in the development of
methods and technology for modern market research. Moreover,
as a result of its worldwide network of own subsidiaries and
branches, the Group has a high level of local market knowledge
and marketing expertise.
The acquisition of nop World was strategically the most important
step in pushing ahead globalization of the company network,
which has been pursued intensively since GfK’s ipo in 1999. It
also provided the opportunity to redefine GfK’s strategic aims.
The Management Board and Supervisory Board adopted the 5 Star
Initiative at a strategy meeting in October 2005. This initiative sets
out five milestones designed to steer the activities of the GfK Group
over the course of the next five years.
The first initiative Fact-based Consultancy concerns the consistent
expansion of the GfK Group’s range of high-quality long-term
consulting services based on market research findings and targeted
at decision-makers in companies. The GfK Group offers advice on
innovative and complex market research instruments and analyses
and assists in the decision-making process with respect to strategic
and operational marketing questions.
The second initiative top 3 defines where GfK aims to be positioned
in the global market research sector. GfK aims to become number 3
in the sector and, at the same time, at least the number 3 in each of
its business divisions and in the key market research regions. It is
pursuing this aim worldwide for the divisions, Custom Research,
Retail and Technology and HealthCare and, especially in the
European region, for Consumer Tracking and Media.
Thirdly, with the Global Reach initiative, GfK aims to further expand
its global network and be present in all countries important to
market research through its own subsidiaries.
Fourthly, with the Full Service initiative, GfK will continue to
position itself as a company that specializes exclusively in market
research services. This covers knowledge of the commodity
markets of GfK’s clients and the regional and national conditions
in the countries in which GfK’s clients operate. This also includes
an innovative and international range of services and the use
of state-of-the-art technological instruments and complex data
collection, analysis and management procedures.
The fifth initiative, Excellent Financials, defines GfK’s financial
targets for the next few years. GfK has set itself the ambitious goal
of approaching the mark of eur 1.5 billion with its sales and
achieving a margin of between 13 % and 15 %. In addition, GfK
wants to significantly reduce its net indebtedness and lower the
ratio of net indebtedness to ebitda to a value of around 100 %.
GfK also aims to achieve a tax ratio, before one-off effects, of
around 30 %.
4.1 Introduction
From 2005 onwards, the GfK Group will publish its financial
statements in accordance with International Financial Reporting
Standards (ifrs). The financial data for the divisions and regions
originate from the Management Information System.
In the figures for income set out below, adjusted operating
income as reported in the income statement is discussed as a
key performance indicator. The management uses it to steer
GfK’s operational business Group-wide.
Adjusted operating income is based on operating income. The
following income and expense components are not taken into
account in adjusted operating income: integration costs resulting
from the acquisition of companies, amortization of disclosed
hidden reserves as part of purchase price allocation, share-based
and long-term incentive staff payments, other operating income
and remaining other operating expenses, including in particular
currency effects arising from the valuation as of the balance sheet
date.
GfK is confident that the notes on business performance in
conjunction with adjusted operating income facilitate the interpretation of the GfK Group’s business development and enhance
the informative value in comparison with other major companies
operating in the market research sector. Where income is
mentioned below, this income is the adjusted operating income.
The margin is the ratio of adjusted operating income to sales.
The overview in the following table shows GfK’s performance
excluding figures for nop World as well as GfK’s performance after
acquisition and consolidation.
The notes on the economic and financial development of the
GfK Group as well as the divisions and regions relate to the whole
GfK Group including the newly consolidated subsidiaries of the
former nop World. Changes in 2005 compared with the previous
year are only explained explicitly if the changes do not relate to
the acquisition of nop World.
Where statements refer to the number of employees, in principle,
this represents the total number of full-time posts, irrespective
of whether the individual posts are part-time or full-time posts.
The figures reported and any changes expressed as percentages
in the details relating to the GfK Group’s business performance are
based on figures in eur 1,000. Accordingly, rounding differences
may occur.
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 all companies indicated in
the management report and their full names.
4.2 GfK Group: excellent financial year
Sales and income
In 2005, the GfK Group generated sales of eur 937.3 million.
This represents a 40.1% increase on the prior year.
Earnings1)
In eur million
Sales
Cost of sales
Gross income from sales
Selling and general administrative
expenses
GfK Group: including and excluding nop World1)
In eur million
2004
GfK
“old”
2005
GfK
“old”
Sales
669.1
737.5
+ 68.6
Operating costs
Absolute Change
change
in %
2005
NOP
World
2005
GfK
Group
+ 10.2
199.8
2004
2005
Change
in %
669.1
937.3
+ 40.1
– 451.4
– 638.3
+ 41.4
217.7
299.0
+ 37.3
+ 43.7
– 141.0
– 202.6
Other operating income
10.6
10.3
– 2.8
Other operating expenses
– 9.7
– 26.0
+ 169.0
+ 42.4
107.8
153.5
as a percentage of sales
16.1
16.4
–
937.3
82.9
125.1
+ 50.9
ebitda
586.2
634.9
+ 48.9
+ 8.3
177.3
812.2
12.4
13.3
–
Income
82.9
102.6
+ 19.7
+ 23.7
22.5
125.1
Highlighted items
– 5.3
– 44.4
+ 737.7
Margin in %
12.4
13.9
–
–
11.3
13.3
Operating income
77.6
80.7
+ 3.9
11.6
8.6
–
4.4
28.3
+ 550.2
ebit
82.0
109.0
+ 32.9
12.2
11.6
–
4.1
2.3
– 43.2
– 4.7
– 19.1
+ 306.1
81.4
92.2
+ 13.3
– 28.3
53.1
– 24.7
67.5
– 12.6
+ 27.1
42.3
59.3
+ 40.2
10.8
53.1
8.2
67.5
– 24.3
+ 27.1
1) It should be noted that the nop World companies were only consolidated for the latter
seven months of 2005. As is the case for GfK, the sales and income trend for these
companies is generally significantly better in the second half of the year than the first
six months. Accordingly, the income of nop World cannot be extrapolated for 12 months
on a straight line basis.
MANAGEMENT REPORT
4. Economic and financial development
Income from participations
Financial income
Financial expenses
Income from ongoing
business activity
Tax on income from ongoing
business activity
Attributable to equity holders
of the parent
Attributable to minority
interests
1) Rounding differences may occur
GfK_71
Economic and financial development: GfK Group
income increased by 50.9 % from eur 82.9 million to eur
125.1 million. This rise is mainly attributable to the excellent
performance of the GfK Group and the first-time consolidation
of nop for the months June to December 2005. The Group’s
margin reached the impressive level of 13.3 %. Taking nop into
account on a like-for-like basis over the year as a whole and
including the fact that the first half of the year is generally
weaker in market research, the Group achieved a margin of
12.6 % on a 12-month basis.
The highlighted items include nop World integration costs of
eur 15.7 million, amortization on disclosed hidden reserves as part
of purchase price allocation of eur 15.9 million and expenses for
staff options of eur 2.6 million.
All costs that relate directly to the acquisition of nop World, either
in material terms or in terms of time, are integration costs.
The balance of other income and expenses is down from
eur 0.9 million in the prior year to a deficit of eur 15.7 million.
This includes losses from currency effects of eur 5.3 million
(2004: profit of eur + 2.8 million). This item also includes the
above-mentioned impairment of eur 8.3 million (prior year:
eur 1.5 million).
The factors described above, together brought about an increase
in income from ongoing business activity of 13.3% from
eur 81.4 million in the prior year to eur 92.2 million in 2005.
The income tax ratio fell from 34.7% in 2004 to 26.8% in the
financial year just ended. This exceptionally low ratio is influenced
by the tax-exempt profit from the above-mentioned sale of
participations in two Swiss companies. After adjustment for this
special effect, the tax ratio amounts to 36.7 %. The main reason for
the increase is the expansion of us business, where the tax rate is
higher than the Group’s average.
The GfK Group increased its consolidated total income by
eur 14.4 million from eur 53.1 million in the prior year to
eur 67.5 million in 2005.
GfK Group: income and consolidated total income 2002 – 2005
in eur million1)
In accordance with us gaap
2002
2003
+ 47.3
+ 30.0
+ 67.3
+ 41.1
2004
Compared with the prior year, operating income rose by eur 3.1
million, or 4%. Even the sharp increase in the negative balance of
other operating income and expenses was more than compensated
for by the positive impact from the operating division.
The personnel cost ratio, defined as the ratio of personnel
expenses to sales, was down from 42.3 % in the prior year to
39.8 %. In absolute terms, personnel expenses amounted to
eur 373.1 million (prior year: eur 282.7 million). Scheduled
depreciation and amortization, particularly on software
and fixtures and fittings, rose from eur 24.3 million to eur 36.2
million.
The GfK Group increased ebit by 32.9 % from eur 82.0 million
in the prior year to eur 109.0 million in 2005.
net income from participations increased from eur 4.4 million
in the prior year to eur 28.3 million in 2005. The increase is largely
attributable to profit from the sale of participations in the Swiss
companies, iha·ims and mmxi.
After a deficit of eur 0.6 million in 2004, net financial income,
which is the balance of financial income and expenses, was down
to a deficit of eur 16.8 million in the financial year just ended.
This development resulted primarily from the increase in interest
expenses connected with the financing of the acquisition of nop
World.
72_GfK
+ 86.1
+ 63.5
In accordance with ifrs
2004
2005
+ 82.9
+ 53.1
+ 125.1
+ 67.5
in accordance with us gaap: operating income, in accordance with ifrs: income
in accordance with us gaap: consolidated total income before minority interests,
in accordance with ifrs: consolidated total income
1) Prior to 2002, accounting was in accordance with the German Commercial Code (hgb).
Therefore only four years
Asset and capital situation
Compared with the prior year, the GfK Group’s total assets
increased by eur 932.5 million to eur 1,495.8 million. On the
assets side of the balance sheet, eur 545.6 million of the increase
was attributable to growth in goodwill and eur 170.6 million was
attributable to a rise in other intangible assets. Both effects are
almost entirely connected with the first-time consolidation and
purchase price allocation of the nop World companies. Under
current assets, this acquisition was mainly noticeable in the
increase in trade receivables of eur 115.0 million to eur 253.2
million.
In eur million
Capital expenditure was fully financed out of cash flow
from operating activity of eur 128.9 million (prior year:
eur 92.1 million). Taking into account these expenses of
eur 35.4 million, free cash flow amounted to eur 93.5 million.
In 2004, it totaled eur 69.7 million. This means that acquisitions
and other financial investments could only be financed in part
out of cash flow from operating activity in the year under review.
31.12. 2004
31.12. 2005
Change
in %
Share of
total
assets
in %
347.6
1,104.3
+ 217.7
73.8
215.6
391.5
+ 81.6
26.2
Change in free cash flow1)
256.7
426.6
+ 66.1
28.5
In eur million
99.4
699.0
+ 603.0
46.7
Cash flow from operating
activity
Capital expenditure
207.1
563.2
370.2
1,495.8
+ 78.8
+ 165.6
24.8
100.0
Assets
Non-current
assets
Current
assets
Equity and liabilities
Total equity2)
Non-current
liabilities
Current
liabilities
Total assets
2) Including equity attributable to minority interests
Free cash flow before
acquisitions, other investments
and asset disposals
Acquisitions
Other financial investments
Changes on the liabilities side of the balance sheet are mainly
attributable to the financing of the acquisition of nop World.
As a result of the capital increase, GfK’s equity rose by
eur 90.3 million. External financing mainly affected the level
of long-term financial liabilities, which rose by eur 508.3 million.
The increase in short-term external capital was primarily due to
the following factors: the rise in trade payables by eur 52.5 million,
liabilities arising from work in progress of eur 32.2 million and the
increase in other short-term external capital of eur 83.4 million.
The effects of acquiring nop World are reflected in these three
items.
The equity ratio as of December 31, 2005 was 28.5 % (prior year:
45.6%).
Development of equity ratio 2002 – 2005 in percent1)
In accordance with us gaap
+ 38.7
2003
+ 40.7
2004
+ 44.3
In accordance with ifrs
20042)
20052)
+ 45.6
+ 28.5
1) Prior to 2002, accounting was in accordance with the German Commercial Code (hgb).
Therefore only four years are shown here.
2) In accordance with ifrs, this includes equity attributable to minority interests.
31.12. 2005
Change
in %
92.1
– 22.4
128.9
– 35.4
+ 40.0
+ 58.2
69.7
93.5
+ 34.1
– 59.6
– 645.3
+ 982.1
– 2.6
– 1.2
– 52.6
Asset disposals
2.0
28.4
+ 1,289.8
Free cash flow after
acquisitions, other investments
and asset disposals
9.5
– 524.6
–
Due to the high volume of acquisitions, GfK’s financial liabilities
increased considerably in the financial year just ended. Accordingly,
in net terms, eur 550.3 million is attributable to funds from
financing activities.
net indebtedness, defined as the balance of cash, cash
equivalents and short-term securities less interest-bearing
liabilities and pension obligations, increased by eur 483.7
million to eur 523.0 million (prior year: eur 39.3 million).
Change in net indebtedness1)
In eur million
2002
31.12. 2004
MANAGEMENT REPORT
Balance sheet growth1)
Liquid funds
Short-term securities and time
deposits
Liquid funds, short-term securities
and time deposits
Liabilities
to banks
31.12. 2004
31.12. 2005
Change
in %
48.7
79.6
+ 63.5
6.5
5.5
– 14.9
55.2
85.1
+ 54.2
45.3
548.4
+ 1,109.2
Pension obligations
27.6
38.4
+ 39.5
Liabilities
under finance leases
16.4
15.2
– 7.1
Other interest-bearing
liabilities
Interest-bearing liabilities
5.2
94.5
6.1
608.1
+ 17.5
+ 543.8
– 39.3
– 523.0
+ 1,231.5
Net indebtedness
Investment and financing
In 2005, GfK investments totaled eur 681.9 million (prior
year: eur 84.6 million). Of this, eur 643.5 million related to the
acquisition of consolidated companies and other business units
and eur 35.4 million related to the purchase of software, fixtures
and fittings and other tangible assets.
GfK_73
Economic and financial development: business divisions
Gearing, which is the ratio of net indebtedness to equity, rose
accordingly above-average from 15.3 % in the prior year to 122.6 %
in 2005. The ratio of net indebtedness to ebit, ebitda and free cash
flow also shows a marked increase on the prior year.
Gearing and ratio of net indebtedness1)
to ebit, ebitda, free cash flow
In %
2004
2005
Gearing (net indebtedness/equity)
15.3
122.6
Net indebtedness/ebit
47.9
480.1
Net indebtedness/ebitda
36.4
340.6
Net indebtedness/free cash flow
56.3
559.2
Expenses classified as soft facts are not capitalized, but are
charged directly to the income statement. They mainly include
non-capitalized expenses for setting up and maintaining panels,
for in-house software as well as for staff training and continuous
professional development. These investments play a crucial role
in securing the company’s future success, as they help to raise
market entry barriers against possible competitors. Investments in
soft facts increased by 32.9 % to eur 45.1 million in the financial
year just ended. Of this, eur 10.5 million resulted from newly
consolidated companies
Expenses for soft facts1)
In eur million
2004
2005
excluding
newly consolidated
companies
Costs of maintaining panels
(incl. recruitment)
Software development costs
21.5
6.6
22.9
5.6
30.9
7.0
+ 43.3
+ 6.5
Training and continuous
professional development
5.3
5.5
6.2
+ 17.4
Other
0.5
0.6
1.0
+ 90.9
Total
33.9
34.6
45.1
+ 32.9
2005
including
newly consolidated
companies
Change
in %
4.3 Business divisions: focusing on consumers and markets
Service offering: comprehensive and cross-border
GfK offers its clients from the consumer goods and pharmaceuticals industry, retail, media and the service sector a
comprehensive range of information and consulting services
in five business divisions. Clients use these services to aid the
decision-making process in the areas of product and pricing
policy, logistics and sales as well as marketing and advertising.
custom research: through around 50 subsidiaries in more
than 30 countries and via partnerships in another 60 countries,
GfK’s Custom Research division provides information services
on operational and strategic marketing decisions. These services
include tests and studies on product and pricing policy, on brand
positioning and brand management, on traditional and modern
forms of communication with consumers and users, on optimizing
distribution as well as on customer loyalty issues.
retail and technology: GfK’s Retail and Technology division
provides clients from trade and industry with regular information
services based on continuous surveys and analyses of sales of
technical consumer goods in the retail sector in more than 60
countries worldwide. Among the market segments in which GfK
surveys and analyses data are office communication, photographic
technology and optics, electrical household appliances, information
technology, telecommunications, sports equipment, tourism, consumer
electronics and entertainment media.
consumer tracking: GfK’s Consumer Tracking division provides
its clients with regular information services based on continuous
surveys and analyses of the purchasing decisions and behavior
patterns of consumers in 26 European countries. The information
and consulting services cover nearly all fast-moving consumer
goods as well as numerous other consumer goods and services.
media: GfK’s Media division provides information services on the
intensity and nature of media usage and acceptance. The services
are directed at clients from media companies, agencies and the
branded goods industry in more than 20 European countries and
– since 2005 – in the usa too. These services relate to information
about both traditional media like television, radio, print, film and
outdoor advertising as well as the Internet and online and offline
media.
healthcare: GfK’s HealthCare division provides its clients from
the pharmaceuticals and healthcare industry worldwide with
information and consulting services for special health markets
covered by GfK’s network in America, Europe and Asia. The
services include analyses of product development and market
communication, image cultivation and price control of medicines,
market positioning, customer satisfaction and information on
the sales volumes of products used in the dental and veterinary
sectors and in laboratories.
74_GfK
GfK Group: breakdown of growth in sales and income in %1)
Total growth
+ 40.1
+ 50.9
Growth from acquisitions
+ 33.2
+ 29.5
Organic growth
+ 6.5
+ 21.2
Currency effects
other: the business divisions are supplemented by the Other
division, which covers in particular GfK’s central services
for its subsidiaries and participations as well as their partners.
The division mainly includes GfK Data Services, GfK Methodenund Produktentwicklung as well as the departments of
GfK’s Group Services. Up until the end of 2005, GfK Business
Solutions & Processing was included in this division. However,
after deliveries and services to the company Information
Resources were terminated, GfK Business Solutions & Processing
was integrated into GfK Data Services.
+ 0.4
+ 0.3
Sales
Acquisition of nop World: three business divisions affected
Income
The acquisition of the nop World companies essentially affected
three of GfK’s five business divisions:
Custom Research, whose share of GfK’s overall sales rose from
37.3 % to 44.4 %,
Proportion of divisional sales to total sales1)
Media, whose share of sales increased from 9.3 % to 10.3%,
Custom Research
44.4 %
Consumer Tracking
10.7%
22.4 %
HealthCare, whose share of sales grew from 10.2 % to 11.4%.
Media
10.3 %
Other
0.8 %
MANAGEMENT REPORT
HealthCare
11.4 %
Proportion of divisional income to income1)
Custom Research
32.7 %
Consumer Tracking
3.6 %
43.1 %
Media
15.7 %
HealthCare
9.6 %
Other2)
– 4.8 %
2) Not taken into account in chart
Margin by business division in %1)
Custom Research
9.8
Consumer Tracking
25.7
4.5
Media
HealthCare
20.4
11.2
1) Income in relation to sales, excluding Other
GfK_75
Economic and financial development: business divisions
Economic development:
Sales up in all business divisions
In financial year 2005, all business divisions recorded growth
in sales.
custom research: In 2005, Custom Research generated the
highest growth in sales of all GfK’s business divisions. Sales
increased by 67 .0 % from eur 249.4 million to eur 416.4 million.
Of this, 59.7 percentage points were acquisition-related.
6.5 percentage points of the growth in sales were of an organic
nature. This was especially due to the good business performance
of companies in Western and Southern Europe and Central and
Eastern Europe.
retail and technology: The Retail and Technology division
increased its sales by 12.1% to eur 209.6 million. With growth of
7.9 percentage points, it was once again the leading GfK business
division in terms of organic growth. Its success is mainly due to
three factors: firstly, the much expanded network, which makes it
possible to gather market research data on technical consumer
goods on all continents. In 2005, the expansion of this network was
pushed ahead in new regions. Secondly, the range of services was
expanded and thirdly, the frequency with which market reports are
delivered to clients was increased. The growth through acquisitions
of 4.2 percentage points resulted primarily from the consolidation of Beyen Marktforschung and GfK Audits and Surveys.
Retail and Technology: key figures1)
Custom Research: key figures1)
In eur million
2004
2005
Change
in %
Sales
249.4
416.4
+ 67.0
20.1
40.9
+ 104.0
3)
Income
Margin in %
2)
2004
2005
Sales
187.0
209.6
+ 12.1
47.1
54.0
+ 14.5
Margin in %2)
+ 25.2
+ 25.7
+ 0.53 )
Number of employees
1,692
1,876
+ 10.9
1,378
1,508
+ 9.4
Income
+ 8.0
+ 9.8
+ 1.8
Number of employees
1,961
3,401
+ 73.4
of which abroad
of which abroad
1,577
3,020
+ 91.5
2) Income in relation to sales
3) Percentage points
Changes
in %
In eur million
Retail and Technology: breakdown of growth in sales and income1)
Custom Research: breakdown of growth in sales and income %
1)
Total growth
+ 12.1
+ 14.5
Total growth
+ 67.0
+ 104.0
+ 4.2
+ 0.1
+ 59.7
+ 65.8
Organic growth
+ 7.9
Organic growth
+ 14.2
+ 6.5
+ 37.4
Currency effects
+ 0.0
+ 0.1
Currency effects
+ 0.7
+ 0.8
Sales
Income
Sales
Income
The business division’s income rose by 104.0 % to eur 40.9 million.
First-time consolidations were responsible for 65.8 percentage
points of the growth in income. 37.4 percentage points of growth in
income were organic growth. This pleasing increase also resulted
from good business in the region Western and Southern Europe.
The successful restructuring of GfK Intomart played a crucial role
in this. Currency effects boosted income by 0.8 %. At 9.8 %, the
margin was significantly higher than in the prior year (8.0 %).
76_GfK
The business division’s income increased very pleasingly by 14.5%
to eur 54.0 million. This growth is almost exclusively of an organic
nature and is attributable not only to the division’s good order
book situation, but also to the use of cost synergies resulting from
successful implementation of the production system startrack.
Growth through acquisitions and currency effects each comprised
0.1 percentage points of the total growth in income. At 25.7%, the
business division’s margin was once again very good and exceeded
the prior year’s level of 25.2 % in 2005.
consumer tracking: Sales in GfK’s Consumer Tracking division
rose by 6.3 % to eur 100.3 million (prior year: eur 94.4 million).
5.9 percentage points of the growth were of an organic nature
and 0.4 percentage points resulted from currency effects. The
household panel ConsumerScan performed particularly well in
Germany. In the financial year just ended, it was expanded by
3,000 households to 20,000 households. Thus, GfK succeeded
in increasing the order volume of existing contracts and also in
winning new clients. In addition, GfK Panel Services, Netherlands,
improved its business significantly compared with the prior year,
mainly in the ConsumerScope area.
Consumer Tracking: key figures1)
In eur million
2004
2005
Change
in %
Sales
94.4
100.3
+ 6.3
Income
5.8
4.5
– 22.3
+ 6.2
+ 4.5
– 1.73)
Number of employees
849
875
of which abroad
590
602
Margin in %2)
media: As demonstrated as early as 2004 and despite moderate
economic performance of the media industry, the demand for
information and consulting services in the Media division saw a
further increase. In the financial year just ended, this business
division continued on its successful course. Sales rose very
sharply from eur 62.2 million in 2004 to eur 96.2 million, which
is equivalent to a 54.5 % growth. Of this, 47.5 percentage points
were attributable to acquisition-related growth and 6.7 percentage
points were of an organic nature. In particular, the German
subsidiaries performed very well. Furthermore, additional orders
for television viewer ratings as well as an order for the delivery
of 4,000 GfK meters to measure tv reach to India contributed to
this growth. Currency effects boosted sales by 0.3 %.
Media: key figures1)
Change
in %
In eur million
2004
+ 3.1
Sales
62.2
96.2
+ 54.5
+ 2.0
Income
8.1
19.6
+ 143.8
Margin in %2)
2005
+ 12.9
+ 20.4
+ 7.53)
Number of employees
348
476
+ 36.8
of which abroad
210
333
+ 58.6
MANAGEMENT REPORT
Consumer Tracking: breakdown of growth in sales and income in %1)
Total growth
+ 6.3
– 22.3
Media: breakdown of growth in sales and income in %1)
Total growth
+ 54.5
+ 143.8
0.0
– 5.4
Organic growth
+ 47.5
+ 5.9
+ 112.9
– 17.4
Organic growth
Currency effects
+ 6.7
+ 0.4
+ 0.5
Sales
Income
+ 30.9
Currency effects
+ 0.3
+ 0.0
Sales
By contrast, income performance was unsatisfactory: it fell by
22.3 % to eur 4.5 million. Of this, 17.4 percentage points were
of an organic nature. This decline is mainly attributable to the
reorganization of the panel business in Switzerland, which became
necessary after both supply and demand in the retail sector had
changed, according to sales information gathered on a continuous
basis.
Acquisition-related effects caused the business division’s income
to drop by 5.4 %. The main reason for this was the unsatisfactory
income generated by the company GfK Gral-Iteo, Slovenia, which
was consolidated for the first time in 2005. Since then, this
company has suspended its service in this area. Currency effects
boosted income by 0.5 %. After 6.2 % in the prior year, the
Consumer Tracking division achieved a margin of 4.5 % in the
financial year just ended.
Income
The Media division’s income increased at an above-average rate of
143.8 % to eur 19.6 million. Of this growth, 112.9 percentage points
were attributable to newly consolidated companies. Organic growth
was very positive at 30.9 %. This was partly due to the business
success of those GfK companies operating in the media sector in
Germany. The margin rose correspondingly sharply from 12.9 to
20.4 %.
GfK_77
Economic and financial development: regions
healthcare: GfK’s HealthCare division increased its sales by an
impressive 57.6 % to eur 107.3 million. Of this, 52.4 percentage
points were due to acquisitions. 4.7 percentage points of the
growth in sales were of an organic nature. Currency effects
amounted to 0.4 percentage points.
HealthCare: key figures1)
others: At eur 7.5 million, sales generated by the Other division
were down slightly on the prior year (eur 7.9 million). The drop
in sales was of an exclusively organic nature and is mainly
attributable to the reduced volume of services provided by GfK
Business Solutions & Processing to the company, Information
Resources. At the end of the year, GfK Business Solutions &
Processing was integrated into GfK Data Services.
In eur million
2004
2005
Changes
in %
Sales
68.1
107.3
+ 57.6
7.8
12.0
+ 54.9
In eur million
Income
Margin in %2)
Others: key figures1)
+ 11.4
+ 11.2
– 0.23)
Sales
Number of employees
246
440
+ 78.9
Income
of which abroad
177
361
+ 104.0
2004
Margin in %2)
2005
Changes
in %
7.9
7.5
– 4.8
– 6.0
– 6.0
– 0.7
– 75.6
– 80.0
– 4.43)
Number of employees
443
447
+ 0.9
of which abroad
105
104
– 1.0
HealthCare: breakdown of growth in sales and income1)
Total growth
+ 57.6
+ 54.9
Others: breakdown of growth in sales and income1)
Total growth
– 4,8
+ 52.4
+ 32.4
– 0,7
Organic growth
0.0
+ 4.7
– 2.7
+ 22.0
Organic growth
Currency effects
– 4.7
+ 0.4
+ 0.5
Sales
+ 1.9
Currency effects
– 0.1
Income
0.0
Sales
The HealthCare division’s income rose by 54.9 %. Of this, 32.4
percentage points were attributable to the acquisition of companies, while 22.0 percentage points were of an organic nature. The
latter is essentially thanks to the good income generated by GfK
v2, usa, as well as the German companies, GfK HealthCare and
gpi Kommunikationsforschung. By contrast, the unsatisfactory
business of the HealthCare divisions of GfK Martin Hamblin had a
negative effect. As a result, these were integrated into GfK nop,
uk, and into GfK v2, usa, as of September 1, 2005. The margin of
11.2% remained almost unchanged from the prior year (11.4 %).
78_GfK
Income
The deficit in income of eur 6.0 million resulted firstly from Group
services that could not be offset. Secondly, income was reduced by
expenses for the restructuring of the field research team in the
Panel area of GfK Business Solutions and Processing. Despite these
one-off expenses, income was virtually at the prior year’s level.
Company network strongly expanded
The GfK Group operates a network consisting of its own subsidiaries
in over 70 countries throughout the world and on every continent.
In terms of organization, the business is divided up into six regions:
In addition to the acquisition of nop World, GfK has also acquired
or incorporated other companies in Western and Southern Europe
and America within its network. The table above contains all major
company acquisitions and sales as well as the newly established
businesses of strategic importance in 2005.
germany, the home of the GfK Group,
Economic development: market share expanded
western and southern europe, where the GfK network has
successively expanded to 12 countries since the early 60s,
All the regions increased their sales and, apart from Asia and
the Pacific, income in financial year 2005 compared to the prior
year.
northern europe, where it has also established itself in
5 countries since the early 60s,
Regional breakdown of total sales1)
central and eastern europe, where GfK founded its first
subsidiaries in 1989,
america, where GfK first established itself following the stock
market flotation in September 1999, has since become active in
four business divisions and ten countries,
asia and the pacific, where it has been running the Retail and
Technology business division since the early 80s and is now
present in 15 countries. It has also been running the HealthCare
division there since 2005.
The acquisition of the nop World companies resulted in a marked
change to the regions‘ shares of total sales. The regions Western and
Southern Europe, Northern Europe and America expanded appreciably. Following the inclusion of the nop World companies in the scope
of consolidation as from June 1, 2005, Germany, with a share of 27.1%
(prior year: 35.3%), relinquished its position as the region with the
highest volume of sales since GfK’s incorporation. The region Western
and Southern Europe is now the leader which, following 32.2 % in
the prior year, has a share of 27.5 %. The sales share for the region
America has increased from 12.3% in 2004 to 22.1% in financial
year 2005.
Germany
27.1 %
5.6 %
27.5 %
America
22.1 %
Northern Europe
13.6 %
4.2 %
Regional breakdown of income1)
Germany
25.2 %
MANAGEMENT REPORT
4.4 Regions: competence in local markets around the world
4.4 %
33.4 %
America
25.3 %
Northern Europe
6.5 %
5.1 %
Margin by region in %1)
Changes in the GfK network
Company
Investment
activity
nop World,
uk
Acquisition
Share
purchase/
Change
Business
in %
division
100
Region
Western and
Southern Europe,
Northern
Europe,
America
Acquisition
Sale
GfK v2, usa
Increase
in shareholding
From 51
to 100
HealthCare
America
GfK Equity Research,
usa
Caribou Lake
Software, usa
Incorporation
Increase
in shareholding
100
Retail and
Technology
Custom
Research
America
Retail and
Technology
Germany,
America
Beyen Marktforschung, AcquiGermany
sition
From 50
to 0
51
51
From
19.9 to
69.8
100
HealthCare
Custom
Research
Custom
Research
Western and
Southern Europe
Western and
Southern Europe
America
12.4
Northern Europe
America
GfK Research Matters,
Switzerland
iha ims health,
Switzerland
GfK Research
Dynamics, Canada
Adimark, Chile
Acquisition
Acquisition
33
Custom
Research,
Retail and
Technology,
Media,
HealthCare
HealthCare
Germany
Asia and the Pacific
16.2
6.4
10.5
15.3
16.1
America
America
GfK_79
Economic and financial development: regions
germany: In 2005 GfK increased its sales in its home market of
Germany by 7.3 % to eur 253.6 million (prior year: eur 236.3
million). 6.0 percentage points of growth were of an organic
nature. This can be attributed, in particular, to the outstanding
business performance of GfK Marketing Services, Germany,
which is part of the Retail and Technology business division.
Nearly all the other business divisions in Germany also achieved
an increase in sales. On the other hand, the drop in the volume
of services provided by GfK Business Solutions & Processing –
which has now been intergrated into GfK Data Services – had an
adverse effect on the growth in sales. The new consolidation of
Beyen Marktforschung increased sales by 1.3 %.
western and southern europe: The region Western and
Southern Europe increased its sales by 19.4 % to eur 257.5 million
(prior year: eur 215.7 million). A good 8.6 percentage points of these
were of an organic nature and almost all of the GfK companies based
in the region contributed to these figures. 10.8 percentage points of
the increase in sales resulted from acquisitions. Currency effects
were not relevant.
Western and Southern Europe: key figures1)
2004
2005
Sales
215.7
257.5
+ 19.4
32.1
41.8
+ 30.2
Margin in %2)
+ 14.9
+ 16.2
+ 1.33)
Number of employees
1,849
2,070
+ 12.0
Income
Germany: key figures1)
Changes
in %
In eur million
2004
2005
Sales
236.3
253.6
+ 7.3
25.1
31.5
+ 25.9
Margin in %2)
+ 10.6
+ 12.4
+ 1.8 3)
Number of employees
1,502
1,587
+ 5.7
Income
Changes
in %
In eur million
Western and Southern Europe: breakdown of growth in sales and income1)
Total growth
+ 19.4
+ 30.2
+ 10.8
+ 6.7
Germany: breakdown of growth in sales and income1)
Organic growth
Total growth
+ 8.6
+ 7.3
+ 23.5
+ 25.9
Currency effects
+ 0.0
+ 0.0
+ 1.3
+ 0.9
Organic growth
Sales
Income
+ 6.0
+ 24.9
Currency effects
+ 0.0
+ 0.0
Sales
Income
Income increased by 25.9 % to eur 31.5 million (prior year:
eur 25.1 million) and, in percentage terms, this increase was more
than three times higher than that for sales. 24.9 percentage points
were organic in origin. The margin increased from 10.6 % in 2004
to 12.4% in financial year 2005.
80_GfK
The total income for the region increased by 30.2 % from eur 32.1
million to eur 41.8 million. 23.5 percentage points were organic
in origin. This positive trend is attributable in particular to the
healthy order book position and the efficient cost management by
the companies in this region. In addition, the restructuring of GfK
Intomart contributed to this. Only the reorganization of the panel
business in Switzerland put a curb on an otherwise successful
trend. 6.7 percentage points of the increase in total income were
related to acquisitions. The margin increased by 1.3 percentage
points to a pleasing 16.2 %.
northern europe: Sales in Northern Europe increased by an
impressive 128.8%, taking them from eur 55.6 million to eur 127.2
million. This resulted exclusively from acquisitions. Growth through
acquisitions totaled 131.2 percentage points, while there was an
organic drop in sales of 1.9%. This is mainly due to the poor
business performance of GfK Martin Hamblin, uk, which was
integrated into GfK nop on September 1, 2005. Currency effects
reduced sales by 0.6 %.
central and eastern europe: GfK increased its sales in Central
and Eastern Europe by 31.2 %, taking them to eur 52.7 million.
The organic growth in sales totaling 22.3 % is the highest of all
the regions. The subsidiaries based in Russia and in Turkey, in
particular, increased their sales. 4.2 percentage points resulted
from sales by GfK Gral-Iteo, Slovenia, which had been consolidated
for the first time. Currency effects resulted in a 4.7 % increase in
sales.
Northern Europe: key figures1)
Central and Eastern Europe: key figures1)
In eur million
2004
2005
Sales
55.6
127.2
2.9
8.2
Income
Margin in %2)
Number of employees
Changes
in %
Change
in %
In eur million
2004
2005
+ 128.8
Sales
40.2
52.7
+ 31.2
+ 182.9
Income
4.5
5.5
+ 23.0
+ 11.2
+ 10.5
– 0.73)
826
1,004
+ 21.5
+ 5.2
+ 6.4
+ 1.23)
484
1,033
+ 113.4
Margin in %2)
Number of employees
Northern Europe: breakdown of growth in sales and income1)
Central and Eastern Europe: breakdown of growth in sales and income1)
Total growth
Total growth
+ 128.8
+ 31.2
+ 182.9
+ 131.2
+ 145.4
Organic growth
+ 4.2
– 7.1 %
Organic growth
+ 22.3
+ 25.4
– 1.9
+ 37.9
Currency effects
Currency effects
+ 4.7
+ 4.7
– 0.6
– 0.4
Sales
MANAGEMENT REPORT
+ 23.0
Income
Sales
Income
GfK increased its total income in Northern Europe by 182.9 % to
eur 8.2 million (prior year: eur 2.9 million). The bulk of the growth
(145.4 percentage points) is due to acquisitions. The above-average
organic growth in income amounting to 37.9 percentage points
is due, in particular, to the healthy business performance of GfK
Marketing Services, uk, which is part of Retail and Technology
and efficient cost management in Sweden. As a result of the
reorganization and subsequent integration of GfK Martin Hamblin
into GfK nop, uk, GfK succeeded in paving the way for income
to improve further in this region. Currency effects reduced total
income by 0.4 %. The margin increased in Northern Europe by
1.2 percentage points to 6.4 %.
In 2005 total income increased by 23.0 % to eur 5.5 million (prior
year: eur 4.5 million). Once again, it was the companies in Russia
and Turkey which contributed to this excellent organic growth in
total income with an above-average contribution of 25.4 percentage
points. The reduction in income of 7.1 percentage points, which
is attributable to acquisitions, ensued from charges, as already
mentioned, for GfK Gral-Iteo, Slovenia, in Consumer Tracking.
Currency effects increased total income by 4.7 %. Compared
to the prior year, the margin dropped by 0.7 percentage points to
10.5 %.
GfK_81
Research and development
america: With an increase of 152.4 % from eur 82.0 million
to eur 207.0 million, in America, GfK achieved the highest
growth in sales of all the regions in financial year 2005. The
largest share of this, 147.6 percentage points, was due to
acqusitions. In addition to the acquisition of nop World, the
acquisition of the majority shareholdings in the companies
Adimark, Chile, GfK Research Dynamics, Canada and Beyen
Marktforschung, usa and Canada contributed to this increase.
Organic growth accounted for 3.5% of the increase in sales
and currency for 1.2%.
America: key figures1)
asia and the pacific: In financial year 2005, sales totaling
eur 39.4 million hovered at around the same level as the previous
year. Slight organic growth of 0.3 percentage points was due
on the one hand to weaker business in Japan and on the other
to an increasing number of international orders being processed
from Germany. If this factor were not taken into account, sales
would have increased by almost 6 % compared to the previous
year.
Asia and the Pacific: key figures1)
In eur million
2004
2005
Change
in %
39.3
39.4
+ 0.3
7.0
6.3
– 9.5
+ 17.8
+ 16.1
– 1.73)
511
563
+ 10.2
2004
2005
Change
in %
Sales
In eur million
Sales
82.0
207.0
+ 152.4
Margin in %2)
Number of employees
Income
Margin in %2)
Number of employees
11.3
31.7
+ 180.1
+ 13.8
+ 15.3
+ 1.53)
367
1,258
+ 242.8
Income
Asia and the Pacific: breakdown of growth in sales and income1)
Total growth
America: breakdown of growth in sales and income1)
+ 0.3
– 9.5
Total growth
+ 152.4
+ 180.1
0.0
0.0
147.6
+ 160.2
Organic growth
+ 0.3
– 9.7
Organic growth
+ 3.5
+ 19.4
Currency effects
0.0
+ 0.2
Currency effects
+ 1.2
+ 0.4
Sales
Income
Sales
Income
Total income increased by 180.1% to eur 31.7 million. Just as
for sales, the growth in income, totaling 160.2 percentage points,
was mainly due to the scope of consolidation which had expanded
compared to the prior year. However, with 19.4 percentage points,
organic growth in income was also decidedly encouraging. This
is thanks, in particular, to the healthy order book position and the
efficient cost management of GfK v2, usa. The margin increased
from 13.8 to 15.3 %.
82_GfK
Asia and the Pacific was the only region not to increase its income
compared to the prior year. Income decreased by 9.5 % from
eur 7.0 million to eur 6.3 million. For reasons described above,
there was a reduction in organic income totaling 9.7 %. On the
other hand, currency effects improved income slightly by 0.2%.
Despite a slight drop compared to the prior year, the companies
in Asia and the Pacific achieved a margin of 16.1% which was the
second highest of all the regions.
The development of innovative methods as well as the systematic
updating of tried and tested research instruments are of paramount importance to GfK if it wants to stand its ground when
confronting the competition and to secure and expand future
business opportunities. Innovative research instruments, for
example new survey and analysis instruments, are developed
and implemented by GfK mainly in cooperation with its clients,
but also with university institutions and management consultancy
companies.
GfK Methoden- und Produktentwicklung (method and product
development) carries out central work in instrument development
and basic research. In addition, the business divisions and GfK
subsidiaries carry out projects on a decentralized basis which serve,
in particular, to establish information services in new consumer
goods markets, countries and regions.
5.1 GfK Methoden- und Produktentwicklung: center for
innovative methodical projects
GfK’s central research and development department is GfK
Methoden- und Produktentwicklung (method and product
development) in Nuremberg. It is responsible for the following
areas:
lifestyle research relating to consumer and market segmentation
issues,
two statistics departments which offer advice, training and
support to GfK companies and their clients in specialized
statistical and methodical issues, particularly regarding
multivariate methods. These departments also develop new
instruments and improve existing ones,
a department responsible for defining populations and the
optimization and quality improvement of sample surveys,
a department which develops and implements program concepts
for the survey and analysis software for new instruments.
GfK‘s GfK Methoden- und Produktentwicklung (method and
product development) and basic research department are staffed
by a total of 22 statisticians and method specialists. In the larger
GfK subsidiaries, there are also specialists and experts who advise
the consultants and their clients on location.
In 2005, GfK was essentially involved in three core activities:
the further development of multivariate analysis procedures
which can be used both in the analysis of custom research data
and that of panel data,
the development of survey instruments in panel research,
setting up new and expanding existing consumer and retail
panels.
5.2 Multivariate methods: new procedure in market
segmentation and product research
In 2005 GfK Methoden- und Produktentwicklung was involved in
the further development and optimization of multivariate analysis
procedures.
Together with a management consultancy company and the
marketing chair at Hohenheim University, GfK continued to
develop the conjoint analysis procedure, hilca (Hierarchical
Individualized Limit Conjoint Analysis), until it was ready to
market. The instrument is used to measure the qualities and
characteristics which a product or service should have from the
point of view of its user. It is primarily intended for research
methods in the Custom Research division. The procedure can
take into account a higher number of qualities and characteristics
and provides results which are more valid than conventional
standard procedures.
Currently, various tools are produced for the purposes of
optimizing prices. These can be used for new products and for
products which can be configured by clients (for example, cars
or computers).
In addition, together with GfK Panel Services, Germany, new
methods are currently being tested to model the purchase
behavior of private households more precisely in order to further
improve the existing marketing mix model, Brand Simulator.
MANAGEMENT REPORT
5. Research and development
Also, together with GfK Panel Services, Germany, work has
been and is still being carried out on the further development
of special analyses. These facilitate a better segmentation of
households according to their purchase behavior or provide a
better explanation as to how the profit or loss on a brand can
be traced back to an intensification or extension of consumption
and to profits or losses on other brands.
5.3 Survey instruments and analysis software: new research
concepts and technologies
In 2005 the Consumer Tracking division focused on the following
areas of development:
The current traditional consumer panels describe the purchase
behavior of households particularly in relation to their consumer
habits at home. What is not taken into account is the significant
out-of-home consumption. GfK has devoted increased attention
to this area in its panels since 2005.
Reporting by the panel households in the Consumer Tracking
division has progressively switched from transfer by telephone
modem to transfer via the Internet. This applies both to
ConsumerScan and the ConsumerScope panel.
In addition, in the Consumer Tracking division, GfK increased the
sample survey of its ConsumerScan consumer panel in Germany
from 17,000 to 20,000 households.
GfK_83
Human Resources
In 2005, software specialists in the Consumer Tracking division
started to develop a new online analysis instrument. By means
of the new software, which is expected to be ready in 2006, the
time lag between data collection and its delivery to the client
will be drastically reduced. The new instrument will also provide
a very flexible opportunity for data querying, which can be
used particularly in the causal analysis of market changes and
the change in purchase behavior patterns. Some of GfK‘s major
clients are directly involved in this project.
6. Human Resources
GfK and its Human Resources Services department were faced
with new challenges following the acquisition of nop World and
its numerous new subsidiaries. This essentially involved the
further development of the framework conditions that constitute
the international staff management policy, which is a necessary
requirement for the success of the employees in the companies
belonging to the GfK Group. As part of this policy, it is important
that concepts are already in place and that cultural differences are
respected.
5.4 Panel set-up: expansion of the business in new markets
Following the establishment of the retail panel business in the Retail
and Technology division in Brazil and Chile in the prior year, GfK
proactively progressed the development of a retail panel in Argentina
in 2005.
Through GfK Sverige, GfK expanded its activities in the Retail and
Technology division in the Baltic countries of Estonia, Latvia and
Lithuania. This primarily involved extending the retailer network
via which the sales data on electronic consumer goods is collected
and expanding the quantity and quality of the sales data relating to
electronic consumer goods in these countries accordingly.
6.1 Management remuneration: 5 Star Incentive developed
By means of its 5 Star Incentive, GfK has developed a long-term
remuneration plan for top executives, which will replace the prior
stock options program from 2006 onwards. It is based on two
performance elements:
the increase in GfK’s total income over a three-year period
the Total Shareholder Return (tsr) of GfK shares compared to
the tsr of shares in companies listed on the dj Euro Stoxx Media
Index
The remuneration plan is linked directly with the 5 Star Initiative
and the financial targets of GfK and can also be directly compared
to the performance of competitors.
This new program rewards the personal performance of executives
for the success of their companies, contributing to the sustained
success of the GfK Group overall. It serves, in particular, to strengthen
the management team‘s commitment to the company.
6.2 International Human Resources strategy:
start of implementation
In 2005, Human Resources launched the global implementation
of the new international Human Resources strategy which had
been adopted by the Management Board. It is based on the five
Corporate Values “Client-driven”, “Our people”, “Innovation”,
“Global expertise - local knowledge” and “Growth” and defines
standards for staff management and development. It also provides
executives across the world with tools for sustained staff
management. Central points include conducting regular staff
surveys in Germany and other countries as well as the development
of national innovation strategies.
The development of national innovation strategies encompasses
new ways of creating internal suggestion schemes as well
as a suitable reward scheme for employees whose ideas and
suggestions can be put into practice with direct benefit to the
company.
The ongoing exchange of experiences which takes place at international human resources conferences and the global monitoring
of personnel, in terms of quality and quantity, also constitute some
of the key responsibilities of the Human Resources strategy.
84_GfK
6.3 Employees: launch of international exchange program
InterAct!
Implementation of the Human Resources strategy is supported
by the “InterAct!” program with which GfK intends to promote
the international exchange of staff. Its remit is to strengthen
the transfer of knowledge and to promote cross-border and
cross-divisional cooperation. Target groups are GfK consultants/
specialists and senior consultants/senior specialists.
A member of staff may stay with a company in another country
for up to three months. The first InterAct! exchange took place
from September 2005 to November 2005 between Brazil and
Germany.
Number of employees by division1)
Custom Research
45.3 %
25.0 %
Consumer Tracking
11.6 %
Media
6.3 %
HealthCare
5.9 %
Others
5.9 %
Total 100% 7,515 full-time positions
Number of employees by region1)
6.4 Number of employees: growth mainly due to acquisitions
Over half the growth in Germany (5.7 %) was of an organic nature.
Outside Germany, the increase of 46.8 % in the workforce is mainly
due to the 1,572 employees from nop World. This alone accounts for
38.9 percentage points of the growth. The other companies which
have been consolidated for the first time contributed 5.9 percentage
points to growth in 2005. The high level of growth ensuing from
acquisitions was witnessed primarily in the Custom Research, Media
and HealthCare divisions.
Germany
21.1 %
27.5 %
Northern Europe
13.7 %
13.4 %
America
16.7 %
7.5 %
Total 100% 7,515 full-time positions
MANAGEMENT REPORT
As of December 31, 2005, the staff complement of the GfK Group
totaled 7,515, representing a 35.7 % increase on the prior year.
The Custom Research division recorded the highest increase
in staff levels, up 73.4 % to stand at 3,401 employees (prior
year: 1,961). 45.3% of all GfK staff now work in this business
division.
Northern Europe and America were the regions most affected
by the increase in the workforce and, to a lesser extent, Western
and Southern Europe. In America, the figure more than tripled
compared to the prior year while in Northern Europe, the figure
more than doubled.
6.5 Staff turnover: a slight increase
The staff turnover rate at the GfK Group is expressed as the ratio of
employee resignations in relation to the total number of employees.
In particular, competition in the highly competitive markets of
Central and Eastern Europe and Asia and restructuring measures
as part of the integration of nop World caused this indicator to
rise from 8.7% to 10.4 %. In Germany, which has the lowest
staff turnover rate overall, the rate increased slightly, although it
remained at 2.1% (prior year: 1.7%). Compared to other German
companies, this is still a very low level.
GfK_85
Organization and administration
7. Organization and administration
GfK’s business model focuses on providing information services
that specialize exclusively in market research. The company
has consistently geared its organization and administration to
the standards which support the global growth of GfK. These
predominantly include the decentralization of functions which
ensure an optimum business performance at the individual
companies. In addition to the parent company, the GfK Group‘s
network comprises 27 affiliated companies and one participation
in Germany. Outside Germany, GfK has a total of 172 subsidiaries,
offices and participations in 70 countries. GfK ag acts both as a
holding company and as an active operating unit. The Group is
based in Nuremberg.
7.1 Management Board and divisional executive bodies:
matrix organization
Until May 31, 2005, the company was run by a Management Board
consisting of four members. The number of Management Board
members subsequently increased to five. The Chief Executive
Officer (ceo) is responsible for Strategy, Internal Audit, Product
and Methodology Development, Corporate Communications and
it Services. Before May 31, 2005, the ceo also managed Financial
Services, Human Resources and Central Services. As of June 1,
2006, these responsibilities were taken over by the new Chief
Financial Officer (cfo).
The operating business is organized on a matrix basis. In 2005,
two of the three Management Board members with responsibility
for operations were each responsible for one business division
and certain GfK companies. The third Management Board member,
also responsible for the subsidiaries, was responsible for the
Consumer Tracking, Media and HealthCare divisions. Each business
division also has its own executive body consisting of the responsible
Management Board member and selected executives. The members
of these executive bodies have the task of coordinating work in the
divisions efficiently.
Sales and income are collated along divisional and regional lines.
Hurdle rates for operating income in relation to sales serve as
target and management indicators for each business division.
The Chief Information Officer (cio) advises the Management Board
on the global harmonization of it services, in particular, standards
for optimizing procedures and costs for the purchase of hardware
and software as well as the organization of the network. The cio
reports directly to the ceo.
7.2 Administration: centralized services within the Group
GfK ag‘s Group Services comprise the following centralized
administrative departments:
Investor Relations, Public Affairs and Communications and
Financial Services, which includes Group Accounting, Group
Controlling, Treasury, Tax, Legal Services and Transactions and
Human Resources; all of these have global responsibility.
86_GfK
The Financial Accounting and Operational Accounting departments
of Financial Services as well as Central Services are responsible for
most of the companies in Germany. Outside Germany, responsibility
for the functions of the latter departments rests with the individual
GfK companies.
7.3 Sub-holdings: cross-regional and cross-country duties
As locally-based centers, sub-holdings assume national and
international functions for the operating business. These subholdings include GfK Asia, Singapore, which is responsible
for the Asian companies, and fessel-GfK, Austria, which is
responsible for the majority of subsidiaries in Central and
Eastern Europe.
Since expansion of the alliance with the npd Group in the Retail
and Technology division, GfK has set up two holding companies
according to region. These comprise the Non-Food Tracking
holding for Europe and Asia and the GfK Latinoamerica holding
for Latin America.
In the usa, the majority of companies active in the HealthCare
division and mri are grouped together under the GfK us holding.
Companies operating in the HealthCare division are integrated
in the GfK u.s. Healthcare Companies sub-holding. In addition,
the organization of operations in the Custom Research division is
monitored by the GfK Custom Research North America Board.
8. Purchasing
As an information service provider, purchasing in the traditional
capital goods markets is of secondary importance to GfK.
In Germany, Central Services, which form part of GfK Group
Services, and it Services, which belong to GfK Data Services,
control and monitor the purchase of work materials and standard
equipment. Similar central purchasing departments have been
established in other countries.
9. Environmental protection
In line with the company’s proactive approach, all GfK employees
are urged to comply with environmental and recycling standards
when purchasing, using and disposing of work materials and office
equipment. Employees are supported in this endeavor by the GfK
environmental officer and Central Services and it Services, which
are responsible for the purchase and disposal of materials.
For companies providing market information services to clients
from the consumer goods and pharmaceutical industries, retail,
the media and the services sector, regular direct contact with
existing and potential new clients is the most important marketing
instrument. Accordingly, all GfK subsidiaries are responsible for
organizing and running their own marketing activities in close
consultation with Public Affairs and Communications. The high
degree of decentralization gives GfK subsidiaries the necessary
flexibility to carry out client-oriented marketing appropriate to
the respective market environment and local conditions.
10.1 Marketing: dialogue comes first
Key account management and new business development
All business divisions include cross-divisional marketing activities,
which facilitate the strategic planning and consistent promotion
of business operations with existing and potential new clients.
The tasks focus primarily on the increasing number of clients who
carry out international studies or require information from several
countries or whole regions. Major clients are looked after by key
account managers and their teams.
Conferences and other events
The trade conferences and client events organized by GfK, and
the company‘s active participation in events hosted by German
and international marketing and market research associations,
play a key role in maintaining contact with existing clients and
establishing relationships with potential new clients. Examples
of events organized or co-organized by GfK in 2005 are:
the “Best Brands 2005” event in Munich in January 2005
organized by GfK Marktforschung, WirtschaftsWoche,
Serviceplan, Seven One Media and the Markenverband (German
branded goods association), which are all based in Germany
the Retail and Technology conference in March organized by
GfK rus, Moscow
the Research Summit on the topic “Innovative Solutions to
Optimize Return on Marketing Investment”, held in June in
Berlin and organized by GfK Custom Research Worldwide
the Financial Markets Conference in November in Vienna
organized by Fessel-GfK
the client conference on the qualitative market research topic
“Diving Deep”, held in November in London and organized by
GfK nop
the client conference on the topic of the booming consumer
electronics markets in China, held at the end of November in
Shanghai and organized by GfK Marketing Services China
In addition, the GfK Academies in the Custom Research and
Consumer Tracking divisions offered their clients a total of more
than 20 seminars and workshops on special instruments and
services. Finally, both the GfK Group and individual GfK companies
contributed to numerous conferences, sector events and trade
fairs held by German and international marketing and market
research associations, by delivering specialist lectures and
company presentations.
10.2 Public Affairs and Communications:
Group-wide competence
Public Affairs and Communications, which is tasked with corporate
communications at Group level, is essentially responsible for three
areas: external communications, internal communications and
the design of the corporate image (corporate identity, corporate
design).
MANAGEMENT REPORT
10. Marketing and corporate communications
One of the main focuses for 2005 was the revision of the existing
sections of the Corporate Design guidelines and their expansion
through the incorporation of new elements.
A second focal point was the new design of the GfK website. This
work is continuing in 2006 and aims to create a website which
is modern, not only visually but also in terms of content, for the
GfK Group and all the subsidiaries across the world.
A third focus launched in the second half of financial year 2005
was providing the numerous subsidiaries new to the GfK network
and particularly those from the former nop World with new
documentation and presentation material as quickly as possible,
and supporting them in terms of the new design of publications
and other means of communication.
the conference for Central and Eastern Europe on the topic
“Communications in Transition”, held in June in Vienna and
organized by Fessel-GfK
the conference “The digital world”, held in June in Sydney and
organized by GfK Marketing Services Australia
the annual conference of GfK Marketing Services Thailand on
market trends in the countries of South-East Asia, held in August
in Bangkok
the conference held by GfK Marketing Services Vietnam in
October in Ho Chi Minh City
GfK_87
Risks
11. Risks
All aspects of risk management at the GfK Group are integrated
into a comprehensive early warning system, which is continuously
developed. As in prior years, in 2005 the Group’s external and
internal auditors confirmed the effectiveness of the system.
11.1 Basic principles of risk management: an integrated system
principles of risk management policy: As a basis for positive
risk management, the GfK Group applies principles of risk management policy on which the risk management systems in all the
divisions must be based. The main principles are:
You can only manage risks that are known.
As a result of constantly changing circumstances and demands,
identifying risks is one of the ongoing tasks that form an integral
part of daily working practices. Risk management is an early
warning system which enables appropriate measures to be implemented at an early stage to avert any negative impact on business
growth. GfK’s horizontal organizational structure and the culture
of open communication also increase transparency and facilitate
the identification and management of potential risks.
Risks are systematically assessed.
Not all risks are of equal importance. To ensure efficient risk
management, any risks identified must be assessed systematically
in terms of the potential damage and the probability of the risk
occurring. The potential damage is measured in terms of the
estimated negative impact on the company’s income over the
next two years. The aim of the risk assessment is to ascertain
which risks could materially jeopardize the company’s success.
To this end, GfK has specified standard quantitative and qualitative
threshold values for all business divisions. In addition to the
materiality of a risk, another criterion is whether a risk might
endanger the company’s existence. By applying the threshold
values, it is possible to define when such a risk would be present
for the GfK Group.
Risk management is everyone’s responsibility.
It is the responsibility of every employee to avert potential damage
to the company. In addition to basic knowledge of the risk management system, this requires a high level of risk awareness among
employees. GfK uses targeted information material and holds
workshops to raise risk awareness among its workforce.
responsibilities and functions: Due to the Group’s decentralized structure, direct responsibility for the early
identification, management and communication of risks rests
locally with the operating management of the individual GfK
companies. Risk management coordinators at the companies
ensure that the central regulations are applied in the respective
organization and they also promote risk awareness.
88_GfK
As part of its overall responsibility for the risk management
system, the Management Board has appointed a risk management committee which continually expands and updates the
Group’s arrangements for efficient and effective risk management. This committee is responsible for the planning and
ongoing development of the system’s methodology and for
ensuring its effectiveness. Its key tasks include identifying
risks relevant to the GfK Group and informing the Management
and Supervisory Boards about the current risk situation within
the GfK Group.
processes: In order to take full account of risks, the GfK Group
applies an integrated risk management approach. This involves
identifying and managing strategic and operating risks at the
level of the various companies and at regional, divisional and
Group level.
GfK Group – integrated risk management system
Group level
Divisional level
GfK integrated
risk management
system
Company level
The core of this system is the annual risk inventory carried out by
the risk management coordinators, which covers developments
relating to risks identified in the prior year and new risks that
have emerged. Using a checklist which contains all the areas to
be monitored in terms of risk, risks are assessed according to the
probability of their occurrence and the extent of potential damage,
so that concrete measures can be specified to manage them. If
new risks emerge during the year, or if the risk situation changes
significantly, ad hoc reporting ensures that the Management Board
is informed immediately.
In addition, a standardized reporting system, which is based on
Group-wide standard criteria, guarantees that financial risks relating
to current and future business trends are monitored. Based on the
commercial data provided by the various business units of the company,
Group Controlling produces monthly internal reports which provide
information at an early stage about any possible risks to business
performance. In addition, forecasts and budgets during the year
provide important indicators of any imminent commercial risks.
A continuously updated set of guidelines, which specifies all
mandatory approval processes, also forms part of the internal
controlling process. In 2005, authorization guidelines came
into force, which apply internationally and which stipulate on
a mandatory basis the framework for powers and authorities.
management system with special loyalty programs for major
clients, GfK intends to minimize the risk of losing major accounts.
By taking measures to reduce costs, the business division has, as
in prior years, taken considerable additional precautions.
Elements of the risk management system
Reporting system
The expansion of the network is a further targeted measure
designed to meet the requirements of international clients.
A decisive step was made in this direction with the acquisition
of nop World.
Guidelines
Other
(e. g. security standards,
integration concepts etc.)
documentation and monitoring: All principles, functions
and processes of the GfK Group’s risk management system
are documented in a handbook, which applies throughout
the Group. Every employee can access the handbook on the
Intranet.
The Internal Audit department regularly reviews the structure and
effectiveness of the risk management system. Risk management
is also assessed as part of all audits carried out at subsidiaries in
Germany and abroad. The findings of such audits, combined with
advice from the auditors, help to improve the early warning risk
management system.
11.2 Assessing the risk situation: individual risks
macro-economic risks: For financial year 2006, GfK expects
additional impetus from slight economic growth.
GfK does not currently anticipate substantial risks from the
macro-economic trend, which could result in significant order
setbacks or a decline in sales at Group level.
Bad debts due to insolvency were minimal and did not affect
the GfK Group’s liquidity.
sector risks: The past few decades have shown that, unlike
other segments of the marketing and advertising sector, market
research is relatively unaffected by economic fluctuations.
In addition, as a full-service provider offering a vast range of
studies and analyses and on the basis of its corporate network,
the GfK Group is in a position to compensate for regional and
sector-related fluctuations.
The risks detailed below relating to the individual business
divisions do not therefore pose any major threat to the GfK Group’s
business performance.
The market research segment in which the custom research
division provides services is characterized by the presence
of large international suppliers as well as many smaller local
suppliers. Market entry barriers are significantly lower on
account of the much lower investment costs compared to continuous consumer, media user and retail panel research. With
its range of innovative products and methods and a key account
The retail and technology division’s excellent market position
in the countries where it today operates its own companies makes
a major contribution to the overall success of the GfK Group. GfK
is by far the leading supplier of information on the consumer
electronics and durables markets worldwide. Its strength lies in the
vast market knowledge, the competence of its local management
and the use of cutting edge instruments, which enable the division
to provide global clients with up-to-date services. The systematic
expansion into economically relevant countries in all regions of
the world and the consistent broadening of the range of services
are the strategic cornerstones for further enhancing this market
position. The worldwide introduction of the modern analysis and
production system, startrack, was another important measure in
this respect.
In the consumer tracking division, the reorganization of retail
panel research in Switzerland, which took place in the last financial
year, adversely affected performance. This was a necessary step
resulting from changes in the supply and demand structure of
tracking data on the part of retail. By working together with
large retail companies, this risk should be reduced in the future.
However, fierce international competition persists and is making
market conditions difficult. In order to continue to be successful
in this highly competitive environment, GfK is working very hard
to ensure that the quality and level of innovation of its services
remain high.
MANAGEMENT REPORT
Risk management
handbook
Risk inventory
Exceptional risk
reporting
In 2005, 36 % of sales in the media division resulted from longterm contracts with fixed order volumes relating to continuous
tv and radio ratings research. Accordingly, the greatest risk in
this division is the fact that it depends heavily on major clients.
The acquisition of nop World especially strengthened multi-client
business in the print media and made a significant contribution
towards minimizing this risk. With the development of a uniform,
efficient production and reporting system which can be used
internationally, GfK ensures that it can provide clients with quality
data based on a flexible approach.
Compared to other sectors, healthcare operates in a tightly
regulated market. This presents both risks and opportunities for
the division. By acquiring nop World, GfK’s international presence
in the HealthCare division was expanded. This is a decisive factor,
particularly for major global clients from the pharmaceutical
industry.
GfK_89
Risks
Mergers and acquisitions affect all business divisions, because they
diminish the client base. As a result, there is a risk of marketing
budgets being consolidated and reduced. To compensate for the
concentration process, GfK has increased investment in new client
business and key account management, and offers innovative
and more differentiated technologies and methods. This also
includes consistent quality management. GfK’s overall dependence
on major clients remains low. When compared to the prior year,
the share of GfK Group sales attributable to the top 10 clients
decreased from 15% to 12%.
Operating risks are restricted by the fact that no more than
10 % of consolidated Group sales are transacted with a single
client in any of the divisions. The GfK Group’s global presence
ensures that no regional dependencies arise that may represent
a relevant risk.
operating risks: Last year, the pressure resulting from costs
continued to increase in all the GfK divisions and companies.
The number of cut-price suppliers who use dumping prices to
gain a foothold in the market or who attempt to squeeze competitors out of the market is growing. Clients are very priceconscious but at the same time, they are increasing their demand
for cost-intensive consultancy services and integrated information
solutions. As in prior years, in 2005 GfK continued to invest
substantially in the ongoing optimization of processes, costcutting measures and innovation in order to strengthen its
competitiveness.
GfK monitors the progress of major, cost-intensive innovation
projects by means of a regular reporting system. At present, no
material risks associated with research and development activities
have been identified.
personnel risks: Staff turnover increased slightly in Germany
and at global level as a result of the economic upturn. GfK’s
success depends largely on the qualifications, motivation, performance and loyalty of its employees. In order to attract,
integrate and retain specialists and managers long-term, GfK
offers a differentiated qualification and continued professional
development program and works towards improving its Human
Resources policies on an ongoing basis.
financial risks: In order to finance the acquisition of nop World
in June 2005, GfK ag arranged for a syndicated loan facility
amounting to eur 530 million and usd 170 million, which runs up
until April 2010. As of the cut-off date, GfK had utilized almost
89% of this. In addition, GfK ag has access to bilateral credit lines
totaling around eur 70 million, of which approximately 12 % had
been taken up as of the year-end.
90_GfK
The financing elements referred to, as well as cash holdings
amounting to eur 85.1 million as of the cut-off date, secure the
financing of the Group.
There are currently no financial risks.
foreign currency risk: As a global company, the GfK Group is
exposed to transaction and currency translation 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 business unit. Due to the fact that all GfK operating
companies have sales and expenses in the local currency, the
currency risk at GfK is restricted at operational level. Intra-Group
guidelines also regulate that all GfK units monitor their currency
risks and hedge against currency fluctuations for foreign currency
projects of a certain size. As a rule, GfK provides in-house financing
in the local currency of the subsidiary. The ensuing currency risks
in the Group’s Treasury are hedged using derivatives. Hedging
transactions usually run for 12 months maximum. The offsetting
effects of the underlying transaction and the currency hedge are
recognized in the income statement and are therefore identifiable.
The currency translation risk is due to the fact that many GfK
companies are outside the euro-zone but GfK produces its accounts
in euros. In the consolidated financial statements, the balance
sheets and the income statements of companies outside the eurozone must be converted into euros. The translation-related effects
from changes in exchange rates are shown in Equity and liabilities
on the GfK consolidated financial statements. As the participations
are generally of a long-term nature, GfK dispenses with hedging
directly for net assets. Instead, the Group tries to use natural
hedges to provide cover for participations. To do this, the financing
is in the currency of the respective company so that currency
fluctuations are kept to a minimum. In order to eliminate volatility
in the income statement relating to the cut-off date valuation of
currency liabilities, GfK uses hedge accounting according to ifrs
and pursuant to ias 39 for long-term financing. Accordingly,
valuation effects are reported under Equity and liabilities.
interest rate risks. At GfK, interest rate risks mainly arise
for financial liabilities. GfK has used the favorable interest rate
conditions to safeguard interest rates on a long-term basis and
ensure greater accuracy when calculating financing requirements.
For this reason, as of the cut-off date, GfK ag had hedged the
majority of its financial liabilities by interest rate swaps, which
are reflected as cash flow hedges in accordance with ias 39 and
impact on the income statement like fixed-rate loans.
The above explanations on currency and interest rate risks
comprise information that, in principle, is to be supplied in the
notes to the financial statements.
As a result of the tightening up of legal regulations within the
context of carrying out surveys, risks may arise for the whole of
the market research sector.
GfK is involved in civil law proceedings in a number of countries
which have various causes in law.
Material risks from compensation claims or the above legal
proceedings which are not already covered by provisions, do not
exist at the present time.
As a result of the marked increase in business volume in the usa,
GfK has set up a separate legal department there.
risks ensuing from acquisitions: The acquisition of new
companies and their integration into the Group are associated
with risks. GfK prepares for such risks with extensive due
diligence checks prior to any acquisition and through measures
which support the acquisition process. In addition, the Supervisory Board of GfK ag plays an active role in the acquisition
process.
As a result of many years of experience of buying companies,
GfK is aware of the risks associated with the acquisition of
nop World, which has been GfK’s biggest acquisition to date.
GfK has set up project teams that comprise managers from
GfK and the nop World companies. Their tasks include creating
structures which will result in a swift fusion of the two corporate
groups and harmonization of the service offering, production
processes and administrative duties at organizational level.
it and other risks: Setting up, maintaining and developing
security measures to protect information systems and the data
stored in them is crucial for a market research company such as
GfK whose services are based on providing information about
markets, consumers and brands. Precautions to secure information
technology and associated applications have always been given the
highest priority. From 2002 to 2004, GfK carried out additional
security checks at its head office in Nuremberg. Since 2002, it has
organized systematic it security checks as part of routine annual
audits at other GfK subsidiaries. In 2004 and 2005, mandatory
it security standards were drawn up by GfK for all companies
within the Group and an it Security Policy was developed based
on British Standard 7799. A start has been made in 2006 to
implement the it Security Policy throughout the Group and this
work is expected to be completed in 2007. The Chief Information
Officer (cio) coordinates Group-wide it strategies and security
concepts, working alongside the it security specialists from the
company headquarters in Nuremberg and the it managers in the
GfK companies outside Germany.
As part of its disaster recovery plan, GfK monitors other risks
arising outside the it area on a continuous basis. Essential
risks from compensation claims and liability issues are covered
either locally or on a Group-wide basis by umbrella insurance
policies.
No major it or other risks have currently been identified at the
GfK Group.
11.3 Assessment of overall risk
An assessment of GfK’s overall risk situation shows that the risks
are limited and manageable and do not materially affect the
assets, financial position and income situation of the GfK Group.
No lasting damage to business growth at the GfK Group is
currently anticipated due to individual risks or the interaction
or accumulation of risks.
Due to its size, the integration of the former nop World represents
a major challenge for GfK. The development of the subsidiaries of
the former nop World to date and the process of incorporating
them into business operations shows that GfK is on the right path
and is making good progress.
In summary, the overall risk situation of the GfK Group continues
to be regarded as a low risk situation. At present, there are
no risks that could endanger the continued existence of the GfK
Group.
MANAGEMENT REPORT
legal risks: The concept of “apparent self-employment” is still
a matter of debate in numerous countries. GfK avoids additional
costs by adjusting the employment terms to the respective state
legislation.
12. Major events since the end of the
financial year
In its meeting on February 21, 2006, the Supervisory Board
extended the contract of Petra Heinlein, member of the
Management Board, by 5 years.
In April of this year, GfK signed a contract with agf covering the
gradual switch of the tv viewer panel to a new technology as from
2007. This agreement, which is additional to the current contract
covering tv ratings, will run from 2007 to 2011. Like the other
contract, it contains the option to extend it until 2013. The order
volume up to 2011 totals eur 19 million.
In addition, GfK has expanded its network in Argentina, Israel,
Mexico and Switzerland in the first few months of 2006.
Expansion of the GfK network 2006
Company
Investment
activity
Share
purchase/
change
in %
Business
division
Region
Merc, Mexico
Acquisition
51
Custom Research
America
KleimanSygnos,
Argentina
GfK rt Israel,
Israel
Acquisition
Established
80
Custom Research
America
65
Retail and
Technology
Western
and
Southern
Europe
GfK Research Matters,
Switzerland
Increase
in shareholding
from 33
to 66
HealthCare
Western
and
Southern
Europe
GfK_91
Outlook
13. Outlook
13.2 Market research sector: additional potential for growth
13.1 Macro-economic situation: robust with slight trend
to slowing down
The market research sector is a growth market with above-average
potential. For 2006, experts expect sector growth of around 5 %.
Key growth drivers for the next few years are:
According to economic research institutes, the global economic
trend continues to show strong form at the beginning of 2006.
In the initial months of the current year, the economic expansion
will once more be very strong. However, during the course of the
year, it will gradually lose momentum. This is not indicative of an
actual cyclical downturn.
According to the experts, this applies in particular to the usa
where increased interest rates are likely to result in private
households spending less. In addition, the growth rate of production will probably decline. For Japan and the European Union,
that is in the euro-zone and in particular in the eu accession
countries, the upturn is expected to continue into next year, despite
a slight slowdown in the economy due to less expansionary
monetary policy, more restrictive fiscal measures and a slight
downturn in the global economy.
For the industrialized countries overall, economic researchers
are expecting an increase in actual gdp of 2.7% in 2006 and
2.6% the following year. Overall, inflation is expected to remain
moderate in 2006 and 2007. In the threshold countries of Asia
and South America, production is increasing at a slower pace.
However, growth rates remain above average. This applies in
particular to the economic trend in China, which is only cooling
down gradually. It is expected that the other Asian countries
will also continue to expand rapidly, especially since domestic
demand is of paramount importance for the economies of these
countries.
Since early 2006, the German economy has seen an upward trend.
For the first time in five years, domestic demand is also increasing,
especially private consumption. Experts expect that the increase in
vat, higher interest rates and the slower global economic growth
will have a dampening effect next year.
tougher competition in many national markets between global
and locally-based companies following globalization,
increasing demand for market research services in the Central
and Eastern European countries as well as in the emerging
markets of Latin America and Asia,
continued growing demand from small and medium-sized
companies for market information,
tougher competition as a result of the deregulation of markets
and the associated increased demand for market and customer
information,
demand for information on new product and service markets
which have emerged mainly as a result of innovative communication and information technology.
13.3 Opportunities: further growth through building on
achievements
Two developments represent new challenges for the market
research sector. At the same time, they bring with them opportunities never seen before in the industry:
the continued globalization of our clients and the associated
consolidation of the markets they operate in, and
the rapid development of information and communication
technology that provide the sector with new, efficient and
cost-effective opportunities for collecting, analyzing and
managing data.
Following the acquisition of nop World, GfK has considerably
enhanced its capabilities for mastering these challenges and
turning them into success:
GfK has created the basis for further and sustained globalization
of its network and services to an extent that neither the GfK
Group nor nop World could have achieved alone.
The Group is well positioned in the traditional marketing and
market research markets of Western, Southern and Northern
Europe and North America, as well as in the rapidly growing
markets of Asia, Latin America and Central and Eastern Europe.
This provides GfK with a strong basis for continued growth.
In addition, GfK has expanded its technological and investment
horizon, enabling the Group to meet client requirements by
providing innovative and efficient metering and analysis instruments that can be used at global level and support clients in
their decision-making processes with first-class information and
consultancy services.
92_GfK
In Research and Development, integration is one of the tasks
given priority both this year and next year: at present, crosscompany teams are being set up for research-intensive tasks
such as the development and improvement of market segmentation and forecast models. These teams will include
statisticians and specialists in methodology from the various
GfK subsidiaries.
In addition, the ongoing development of electronic metering
technology and analysis software continues to take high priority.
Another focus is the further development of information systems
and analysis instruments available to clients, which will provide
clients with increasingly flexible options for carrying out analyses
by directly accessing GfK’s databases.
13.5 Human Resources: promoting the integration of the
nop World companies
Based on an unchanged scope of consolidation, GfK expects the
number of staff to increase slightly in 2006.
GfK is focusing heavily on integrating the nop World companies
and other companies acquired in 2005. In addition, an increasing
number of project teams are being set up which are staffed at
international level. These will promote the networking of the
various locations and ensure the comprehensive transfer of
knowledge. The deployment of GfK staff to locations in other
countries is intended to facilitate the transfer of expertise and to
develop the experience of senior executives as fully as possible.
In addition to interesting continuous professional development
opportunities presented by a successful market research company,
GfK offers its staff the option of choosing an international career
within the company.
13.7 Marketing and corporate communications:
harmonizing the websites
In 2006, the complete revamping of the GfK website has top
priority. The website, which was first developed in 1999 at the time
of GfK’s ipo and has since seen many changes, is being replaced
by a solution that is new in terms of structure and visual display
and is based on state-of-the-art technology and design. The
cornerstone of the rework is a Content Management System which
can be used on a centralized or a decentralized basis. It ensures
that the design is harmonized throughout the entire corporate
network.
13.8 Investment and financing: reducing debt
Future investments are focused on enhancing and further
developing technical resources, such as the panels and
production software, and expanding human resources.
Investments in the day-to-day business are financed by the inflow
of funds from cash flow. Any additional capital requirement would
only exist to ensure the financing of acquisitions. Major company
acquisitions are not planned at present. With authorized capital of
around 12.6 million no-par shares and relevant credit facilities, GfK
is also able to provide adequate finance using its own and external
funds.
GfK intends to reduce the debt incurred for financing the
acquisition of nop World. For this purpose, the Group will use
the free cash flow to significantly lower the ratio of net
indebtedness to ebitda.
The Group Treasury department supports this by using cash pools.
GfK is set to expand this central instrument for controlling liquidity,
particularly in the usa.
13.6 Organization and administration: continuing the
streamlining process
13.9 Corporate growth at the GfK Group: exceeding the
1.1 billion euro sales mark
The decentralized corporate structure will be maintained in 2006.
Project teams are working on streamlining the company structures
in the uk and usa.
In 2006, the GfK Group aims to significantly increase sales
and income again. With the same scope of consolidation, GfK
expects sales to total eur 1.1 billion. This equates to an increase
of almost 18 %. As in prior years, GfK assumes that it will outperform the market and gain market share. In addition, the Group
aims to increase income at a rate which is higher than that for
sales.
From 2006 onwards, the Custom Research activities in Latin
America will be combined to form GfK Custom Research Latam
Holding.
MANAGEMENT REPORT
13.4 Research and development: pooling expertise
GfK anticipates that the integration of the nop World companies
will entail additional expenses of eur 2 million to eur 3 million.
These expenses relate mainly to the following factors: optimizing
the it environment, harmonizing methods, streamlining the lease
portfolio and, to a limited extent, lay-offs following the restructuring
of workflows.
GfK_93
Outlook
In the next few years, charges ensuing from the amortization
of disclosed hidden reserves as part of purchase price allocation
are likely to remain at the level of 2005.
From now on, personnel expenses for share-based payments and
long-term incentives will be shown directly in the income statement
in accordance with ifrs. The Stock Option Program, which was last
offered in 2004, will expire in 2011. The expenses associated with
this accounted for around eur 2 million in 2004 and approximately
eur 2.6 million in 2005. In 2005, the system was replaced by
the 5 Star Incentive Program which, as required in the German
Corporate Governance Code, provides for a restriction on pay-outs.
The expenses are calculated on the basis of option models and
take into account a variety of market factors. The amount depends
mainly on company performance and the GfK share price.
Other expense and income components also contain the foreign
currency results. The loans raised in connection with the
acquisition of the nop World companies were structured in such
a way that in future the currency effect on the income statement
would only be minor. The high level of internal financial interlinking in the former nop World has been almost completely
removed in the meantime and the associated foreign currency
impact on other income will be reduced considerably. In its
forecast, GfK assumes that the euro will not change significantly
in relation to the main currencies, the us dollar and the pound
sterling. Accordingly, the currency effects from the operating
business will only have a minimal impact on income.
GfK expects income from participations to be an amount in the
lower one-digit million range.
Although GfK generates the majority of its sales volume in
countries with a high tax ratio, such as Germany, the uk, Italy
and the usa, it is endeavoring to bring the group tax ratio
excluding one-off effects close to the 30 % mark. The increased
interest payments from the financing of the nop World acquisition
will reduce tax expenses.
13.10 Divisional trends: continuing the optimization and
integration process
GfK expects all five business divisions to increase sales and
income. The marked increase in sales in the Custom Research,
Media and HealthCare divisions is mainly due to the full-year
consolidation of the nop World subsidiaries in 2006.
GfK business divisions: guidance 2006
Like-for-like
margin
in %2)
2005
Sales
2005
Growth
in sales
in %
20061)
Custom Research
416.4
> 21.0
~ 8.8
> 8.5
209.6
> 6.0
~ 25.5
> 25.0
Consumer Tracking
100.3
> 7.0
4.5
~ 6.0
96.2
> 20.0
~ 23.8
~ 22.0
In eur million
Media
Margin1)
in %
2006
HealthCare
107.3
> 33.0
~ 7.6
~ 12.0
GfK Group
937.33)
~ 18.0
~ 12.6
> 13.0
1) Expectation
2) Assumption: sales and income of nop World companies for the whole of 2005
3) Including “Other”
The comparison between the 2005 and 2006 margins must take
into account that the nop World companies were only consolidated
for the last seven months of 2005. Just as for GfK, growth in income
for these companies in the second half of the year is, as a rule,
significantly better than in the first few months. Accordingly, the
income of nop World cannot simply be extrapolated on a straightline basis. In the table, in which a 12-month consolidation of nop
World was simulated (like-for-like), this is taken into account when
calculating the margins for 2005.
GfK anticipates the following individual trends:
In the custom research division, GfK expects an increase in sales
of more than 21%. Two tasks are top of the agenda in 2006: firstly,
GfK plans to further harmonize its extensive range of services and
integrate these into a service system. Secondly, the company plans
to drive forward expansion in Latin America and Asia and the
Pacific. The target margin is above 8.5 %.
In the retail and technology division, GfK expects sales
to increase by at least 6% and the margin to be higher than
25 %. Opportunities in this business division are based mainly on
innovation and dynamic growth of consumer technology markets.
Accordingly, GfK aims to extend further its range of services in this
division.
In the consumer tracking division, GfK expects sales to be up
by more than 7 % and anticipates that this business division will
increase its margin to around 6.0 % in the current year. In this
way, the business division will succeed in improving its income
following disappointing setbacks in 2005.
94_GfK
In the healthcare division, GfK aims to increase sales by more than
33% and achieve a margin of around 12%. The Group also intends
to strengthen its presence further in the global pharmaceutical
markets of the usa and Europe and rapidly expand business in
Asia.
In the other division, GfK expects sales to remain at the same level
as for the prior year and anticipates that once more a loss will be
recorded which should, however, be lower than in the past. The
deficit is attributable, in particular, to Group services which cannot
be further offset.
At the end of March GfK had already achieved 51% of its sales
target for this year in terms of existing orders, incoming orders and
sales invoiced. This amount is almost the same as the prior year’s
level. At GfK, the structure of orders that are relevant to sales has
changed following the acquisition of nop World. The proportion of
Custom Research business, in particular, has increased. Due to this
shift in the portfolio of orders, the figures are only comparable with
the prior year to a limited extent.
GfK is confident that it is excellently placed as a specialist market
research company and regards its focus on the provision of related
services as a crucial competitive advantage. The Group will
therefore continue to fully exploit and extend market opportunities
in this sector.
Prof. Dr. Klaus L. Wübbenhorst
Petra Heinlein
MANAGEMENT REPORT
In the media division, GfK anticipates that sales will rise by more
than 20% and that the margin will be around 22 %. The slight
decrease on 2005 is due to expenses relating to setting up a
uniform production system for tv audience research. Long-term
contracts for continuous tv and radio ratings provide a good order
basis for the media division. The trend in custom media research
in the current year will depend on how the upturn experienced
by the print media market continues to develop. In addition, GfK
assumes that it will generate additional business by winning
tenders for radio listener and tv viewer ratings.
Dr. Gérard Hermet
Wilhelm R. Wessels
GfK_95
96_GfK
Financial statements for the GfK Group
Consolidated income statement
98
Consolidated balance sheet
99
Consolidated cash flow statement
100
Consolidated statement of recognized income and expense
101
Notes to the consolidated financial statements for 2005
102
General information
102
Consolidation principles
103
Accounting policies
104
Scope of consolidation and major acquisitions
109
Notes to the consolidated income statement
112
Notes to the consolidated balance sheet
115
Proposed appropriation of profits
123
Segment reporting
128
Pro forma statements in accordance with ifrs 3
130
Notes to the transition from us gaap to ifrs
130
Supervisory Board
136
Management Board
137
Shareholdings of the GfK Group
138
143
FINANCIAL STATEMENTS
Auditors’ report
GfK_97
Consolidated income statement in accordance with ifrs in eur’000
for the period January 1 to December 31, 2005
Note
Sales
1., 29.
Cost of sales
Selling and general administrative expenses
2004
2005
669,071
937,335
– 451,354
– 638,321
217,717
299,014
– 141,022
– 202,607
2.
10,591
10,296
3.
– 9,677
– 26,030
5.
82,855
125,055
Integration costs in connection with acquisitions
5.
0
– 15,658
Amortization and impairment of additional assets identified on acquisitions
5.
– 5,614
– 15,902
– 2,597
5.
– 1,958
share-based payments and long-term incentives
2.
10,591
10,296
Remaining other operating expenses
5.
– 8,265
– 20,521
77,609
80,673
Operating income
Income from associates
Other income from participations
6.
ebit
3,182
– 184
25,097
81,958
108,952
Financial income
7.
4,106
2,333
Financial expenses
8.
– 4,700
– 19,085
81,364
92,200
– 28,229
– 24,683
53,135
67,517
Attributable to equity holders of the parent
42,345
59,352
Attributable to minority interests
10,790
8,165
53,135
67,517
Tax on income from ongoing business activity
98_GfK
4,533
9.
Basic earnings per share (eur)
10.
1.35
1.77
Diluted earnings per share (eur)
10.
1.34
1.75
GfK_98
Personnel expenses for
Consolidated balance sheet in accordance with ifrs in eur’000
as of December 31, 2005
Note
31.12.2004
31.12.2005
Assets
Goodwill
11.
190,153
735,771
Other intangible assets
11.
54,605
225,193
Tangible assets
12.
65,024
80,721
Investments in associates
13.
12,420
11,488
Other investments
13.
11,324
4,346
Deferred tax assets
9.
10,085
43,186
Other non-current assets and deferred items
14.
Total non-current assets
Inventories
Trade receivables
15.
3,988
3,581
347,599
1,104,286
1,172
852
138,176
253,211
Securities and fixed-term deposits
16.
6,488
5,522
Liquid funds
17.
48,697
79,599
Other current assets and deferred items
18.
21,090
52,282
Total current assets
215,623
391,466
Total assets
563,222
1,495,752
Subscribed capital
133,734
148,917
Capital reserve
92,000
174,402
Retained earnings
19,487
68,669
Income and expense recognized directly in equity
-7,381
12,402
237,840
404,390
18,910
22,167
426,557
Equity attributable to equity holders of the parent
Minority interests
Total equity
19.
256,750
Long-term provisions
20.
33,811
54,292
Long-term interest-bearing financial liabilities
21.
50,999
559,341
Deferred tax liabilities
9.
13,372
84,764
Other long-term liabilities and deferred items
Non-current liabilities
1,240
556
99,422
698,953
Short-term provisions
22.
7,375
8,012
Short-term interest-bearing financial liabilities
21.
15,901
10,366
Trade payables
23.
Liabilities on orders in progress
Other short-term liabilities and deferred items
24.
30,445
82,920
66,286
98,524
87,043
170,420
Current liabilities
207,050
370,242
Total liabilities
306,472
1,069,195
Total equity and liabilities
563,222
1,495,752
GfK_99
Consolidated cash flow statement in accordance with ifrs in eur’000
Note
2004
2005
53,135
67,517
Write-downs/write-ups of intangible assets
11.
11,212
26,604
Write-downs/write-ups of tangible assets
12.
14,636
17,993
Write-downs/write-ups of other investments
– 2,358
431
Total write-downs/write-ups
23,490
45,028
– 9,995
– 36,669
Increase/decrease in inventories, trade receivables and other assets,
not attributable to investment or financing activity
not attributable to investing or financing activity
Total changes in working capital
Profit/loss from the disposal of non-current assets
16,655
55,062
6,660
18,393
39
– 24,540
Non-cash income from associates
– 585
1,301
Increase/decrease in long-term provisions
2,545
5,304
– 1,335
7,897
Other non-cash income/expenses
Net interest income
7., 8.
Change in deferred taxes
Current income tax expense
9.
Taxes paid
a) Cash flow from operating activity
25.
Cash outflows for investments in intangible assets
2,684
16,257
2,274
– 3,420
26,055
28,142
– 22,857
– 32,950
92,105
128,929
– 9,341
– 14,013
Cash outflows for investments in tangible assets
– 13,028
– 21,385
Cash outflows for acquisition of consolidated companies and other business units, net of
cash acquired
Cash outflows for other investments
– 59,136
– 3,121
– 643,489
– 3,055
Cash inflows from disposal of intangible assets
Cash inflows from disposal of tangible assets
Cash inflows from disposal of consolidated companies and other business units, net of cash disposed of
26
54
681
1,177
0
1,497
Cash inflows from disposal of other investments
1,339
25,708
Interest received
1,612
1,752
– 80,968
– 651,754
b) Cash flow from investing activity
25.
Cash inflows from equity contributions
2,623
94,988
Cash outflows to shareholders of parent
– 6,531
– 9,442
Cash inflows from/outflows to minority interests
– 6,625
– 7,708
Cash inflows from loans raised
30,231
557,928
– 28,737
– 64,562
– 4,960
– 20,950
– 13,999
550,254
– 2,862
27,429
Cash outflows for repayment of loans
Interest paid
c) Cash flow from financing activity
25.
Changes in liquid funds
(total of a), b) and c))
Changes in liquid funds owing to exchange gains/losses, scope of consolidation and valuation
– 1,682
3,473
Liquid funds at the beginning of the period
17.
53,241
48,697
Liquid funds at the end of the period
17.
48,697
79,599
100_GfK
GfK_100
Increase/decrease in trade payables, other liabilities and deferred items,
Consolidated statement of recognized income and expense
in accordance with ifrs in eur’000
Note
Currency translation differences
Change in fair value of equity securities available-for-sale
Change in fair value of cash flow hedges (effective portion)
28.
Valuation of hedges of net investments in foreign subsidiaries
28.
Actuarial gains/losses on defined benefit plans
20.
2004
2005
– 8,444
24,182
14
– 10
– 116
3,732
– 3,745
672
– 3,401
– 7,874
20,758
53,135
67,517
Total recognized income and expense
45,261
88,275
Equity holders of the parent
34,860
79,135
Minority interests
10,401
9,140
45,261
88,275
Total recognized income and expense
Attributable to:
GfK_101
Notes to the consolidated financial statements for 2005
GfK Aktiengesellschaft (GfK ag) is a listed joint stock company
under German law with its registered office on Nordwestring 101,
Nuremberg, Germany. GfK ag and its subsidiaries (GfK Group)
are among the world’s leading market research companies. The
GfK Group provides information services for its clients in the
consumer goods, pharmaceuticals, retail and services industries
and media information services, which they use in marketing
decision-making.
The consolidated financial statements of GfK ag include the
company itself and all consolidated subsidiaries. For the first
time as of December 31, 2005, they have been prepared in
compliance with the International Financial Reporting Standards
(ifrs) as they must be applied within the eu. ifrs 1, “First-time
adoption of International Reporting Standards”, has been applied.
All International Financial Reporting Standards (ifrs) binding
for 2005 and the announcements of the International Financial
Reporting Interpretations Committee (ifric) have been applied
where they have been adopted by the European Union.
Additionally, the accounting principles set out in § 315a sub-section 1
of the German Commercial Code (hgb) have been considered
when preparing the consolidated financial statements. All periods
reported in the present financial statements are represented in
accordance with the ifrs valid as of December 31, 2005. Section 33
of these notes explains how the conversion to ifrs has affected the
net assets, financial position and results of operations as well as the
inflow and outflow of funds of the GfK Group.
In December 2004, the iasb published an amendment to the
International Accounting Standard (ias) 19, “Employee Benefits.”
The amendment “Actuarial Gains and Losses, Group Plans and
Disclosures” included the introduction of an option dealing with
actuarial gains and losses. According to the amendment, actuarial
gains or losses existing as of the reporting date, which have occurred
during the accounting period, may be recorded as equity without
impacting on the income statement. The option in the amendment
to ias 19 may be applied to financial years ending on or after
December 16, 2004. The European Union adopted the amendment
to ias 19 in November 2005.
The GfK Group has made use of the option to record actuarial gains
and losses in the financial statements for 2004 and 2005 without
impacting on income to convey vital information to recipients of
the financial statements on the current level of pension obligations.
The amount of actuarial gains and losses recorded without
affecting the result is shown in the statement of recognized income
and expense.
The consolidated financial statements have been prepared in
euros and rounded up to the nearest thousand euros. All figures
are specified in thousand euros, unless otherwise indicated.
Standards, interpretations and amendments which
have been published but not yet applied
In August 2005, the iasb published the amendment to ias 1
(“Presentation of Financial Statements“), “Capital Disclosures.”
The amendments to ias 1 require additional information on
company equity and become compulsory for financial years starting
on or after January 1, 2007. The iasb encourages earlier adoption.
The amendment to ias 1 was recognized by the European Union
in January 2006. As the amendment to ias 1 deals with compulsory
information to be disclosed on targets, guidelines and procedures
‚for equity management, it is not expected to have any fundamental
impact on the financial statements of the GfK Group.
The amendment to ias 21 (“The Effects of Changes in Foreign
Exchange Rates”), “Net Investment in a Foreign Operation”,
was published by the iasb in December 2005 and has not yet
been recognized by the European Union. The iasb provides for
compulsory application for reporting periods starting on or after
January 1, 2006. The amendment to ias 21 sets out in concrete
form the requirements of ias 21 relating to investments in a foreign
business operation and should simplify conversion differences in
monetary items. Application of the amendment to ias 21 is not
expected to have any fundamental effects on the net assets,
financial position and results of operations of the GfK Group.
The amendment to ias 39 (“Financial Instruments: Recognition
and Measurement”), “Cash Flow Hedge Accounting of Forecast
Intragroup Transactions”, published by the iasb in April 2005,
was recognized by the European Union in December 2005 and is
compulsory for financial years starting on or after January 1, 2006.
The iasb encourages earlier adoption. According to the amendment
to ias 39 foreign exchange risks from an expected, highly probable,
intra-Group transaction may be entered in the consolidated
financial statements as a hedged item. The prerequisite for this
is that the transaction would need to be entered concluded in
a currency other than the functional currency of the company
which concludes the transaction, and the associated exchange risk
would need to be entered in the consolidated financial statements
according to ifrs. Application of this amendment to ias 39 will be
unlikely to have any effect on the net assets, financial position and
results of operations of the GfK Group.
and Measurement”), “The Fair Value Option”, was published
by the iasb in June 2005 and recognized by the European Union
in November 2005. The amendment is compulsory for financial
years starting on or after January 1, 2006. The iasb encourages
earlier adoption. The amendment to ias 39 restricts the option on
the valuation of financial assets and financial liabilities at fair value,
known as the Fair Value Option, to financial instruments which
meet certain criteria. The GfK Group has decided not to use the
Fair Value Option so the amendment to ias 39 does not apply.
The annual financial statements of the parent company, GfK ag,
have been prepared in accordance with hgb and are filed with
the Commercial Register at the district court of Nuremberg under
hr b 9398.
102_GfK
GfK_102
General information
The amendment to ias 39 and ifrs 4 was recognized by the
European Union in January 2006. The amendment is unlikely to
have any impact on the financial statements of the GfK Group.
The ifrs 7 (“Financial Instruments: Disclosures”) published by the
iasb in August 2005 replaces ias 30 (“Disclosures in the Financial
Statements of Banks and Similar Financial Institutions”) and parts
of ias 32 (“Financial Instruments: Disclosures and Presentation”).
Therefore, many of the disclosures previously covered by ias 32
have been adopted into ifrs 7. ifrs 7 requires information on the
importance of financial instruments to the net assets, financial
position and results of operations of the company and also includes
new requirements on qualitative and quantitative reporting of
risks associated with financial instruments. ifrs 7 must principally
be applied by companies in all sectors so the scope of the required
reporting focuses on the degree to which financial instruments are
used and their risk contribution.
The standard was recognized by the European Union in January
2006 and becomes compulsory for financial years starting on
or after January 1, 2007 but earlier adoption is encouraged by the
iasb. Since the GfK Group already publishes comprehensive details
on financial instruments as part of risk reporting, it is not expected
to have any fundamental effect on reporting.
The ifric 4 (“Determining whether an Arrangement contains
a Lease”) published in December 2004 was recognized by
the European Union in November 2005 and is compulsory for
financial years starting on or after January 1,2006. Earlier
adoption is encouraged by the iasb. ifric 4 takes account of
the fact that in practice contracts are frequently concluded
which are not legally drawn up in the form of a lease contract
but do represent a concessionary use against payment on
account based on their economic sense. There are currently
no circumstances within the GfK Group to which ifric 4
would apply.
ifric 7 (“Applying the Restatement Approach under ias 29
Financial Reporting in Hyperinflationary Economics“) was
published in November 2005 and deals with two concrete
application issues relating to ias 29. The interpretation makes it
clear how comparative figures in financial statements prepared
according to ifrs are to be adjusted when the functional currency
of the company preparing the financial statements or the country in
which this currency is listed meet the criteria for hyperinflation.
ifric 7 also rules on how deferred tax items are to be adjusted in
the opening balance sheet.
ifric 8 (“Scope of ifrs 2”), published in January 2006, in
elaboration of ifrs 2 (“Share-based Payment”) establishes that
ifrs 2 also applies to agreements in which the company offers
equity-based remuneration for no or inadequate service in return.
ifric 8 is compulsory for financial years starting on or after May 1,
2006. Recognition of the interpretation by the European Union is
currently still awaited. There are unlikely to be any consequences
for the financial statements of the GfK Group arising from ifric 8
as no relevant agreements exist at present.
ifric 9 (“Reassessment of Embedded Derivatives”) was published
by the ifric in March 2006 but has yet to be recognized by the
European Union. The interpretation sets out in concrete terms
certain aspects of how embedded derivatives are dealt with on the
balance sheet according to ias 39 and is compulsory for financial
years starting on or after June 01, 2006. There are unlikely to be
any consequences for the financial statements of the GfK Group
arising from ifric 9.
In addition to the outlined published but not yet applied standards,
interpretations and amendments, the following, as yet noncompulsory, statements have been issued by the iasb or ifric:
ifrs 6 (“Exploration for and Evaluation of Mineral Resources”)
Amendments to ifrs 1 (“First-time Adoption of International
Financial Reporting Standards”) and ifrs 6 (“Exploration for and
Evaluation of Mineral Resources”)
ifric 5 (“Rights to Interests arising from Decommissioning,
Restoration and Environmental Rehabilitation Funds”)
These accounting principles are not relevant to the financial
statements of the GfK Group and are therefore not explained in
detail here.
Consolidation principles
The annual financial statements of GfK ag and all material subsidiaries whose financial and operating policies are controlled
directly or indirectly are included in the consolidated financial
statements of GfK ag. The financial statements of all companies
included in the consolidated financial statements have been
prepared according to uniform accounting principles.
Companies in which the GfK Group has a participation of not more
than 50 %, but over which significant influence 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 shareholdings of GfK ag is attached in these notes.
Capital consolidation is carried out in accordance with the
International Financial Reporting Standard (ifrs) 3, “Business
Combinations”, on the basis of the purchase method, whereby the
acquisition costs of the participation are charged against the parent
company’s pro rata share in the revalued equity of the subsidiary
at the acquisition date. Intangible assets acquired in business
combinations 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.
ifric 7 is compulsory for financial years starting on or after
March 1, 2006. Recognition of the interpretation by the European
Union is currently still awaited. There are unlikely to be any
fundamental consequences for the financial statement of the GfK
Group arising from ifric 7.
GfK_103
and Measurement”) and ifrs 4 (“Insurance Contracts”), “Financial
Guarantee Contracts”, was published by the iasb in August 2005.
It is compulsory for financial years starting on or after January 1,
2006 but earlier adoption is encouraged by the iasb. The amendment
provides for financial guarantees to principally come under the
scope of ias 39 and to be stated at the fair value when first entered.
Where the guarantor has already stated prior to the amendment to
ias 39 that he regards a relevant contract as an insurance contract
pursuant to ifrs 4, it is either possible to continue entering the
financial guarantee on the balance sheet in accordance with ifrs 4
or apply ias 39.
Accounting policies
Associates that are included at equity (one-line consolidation) are
included for the first time at the acquisition date. 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.
The consolidation on transition from equity valuation to full
consolidation takes place with no impact on the income statement
but is carried out separately for every part-acquisition. The
acquisition costs included in capital consolidation comprise the
equity net book value and the acquisition costs for the majority
acquisition.
Profits 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 cause any change in the total minority interests or the
consolidated total income.
If further shares are acquired in already fully consolidated
companies, the purchase price of the additional acquisition is
credited with the proportionate additionally acquired equity
without impact on the income statement. Any difference on the
assets side arising from the entry is shown as goodwill.
Shares in the equity of subsidiaries attributable to minority
interests are shown separately under equity. Shares in the
subsidiaries’ results attributable to minority interests are shown
as a separate item in the income statement.
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 of 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 an impact on the income statement.
The balance sheets of foreign subsidiaries not prepared in euros
are translated into euros in accordance with the functional
currency concept, based on the average 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.
Exceptions to this are the income statements of the nop World
companies, which are translated into euros at a rate calculated as
the average of month-end exchange rates from June to December,
as nop World was first consolidated as of June 1, 2005.
104_GfK
Differences arising from the translation of asset and liability items
at the exchange rate on the reporting date compared with the
translation on the previous reporting date, and differences arising
from translation of the annual result in the balance sheet (reporting
date rate) and the consolidated income statement (average rate)
are reported in equity without impact on the income statement.
Exchange rate differences arising from capital consolidation are
reported in income and expense recognized directly in equity.
The exchange rates against the euro of the key currencies for the
GfK Group are as follows:
Euro mean rate on
balance sheet date
Main currencies
Euro average rate
during reporting period
Unit of
currency
31.12.2004
31.12.2005
2004
usa
usd 1
0.74
0.85
0.80
0.81
uk
gbp 1
1.41
1.46
1.47
1.46
Switzerland
chf 100
64.70
64.29
64.75
64.61
Japan
jpy 100
0.71
0.72
0.75
0.73
Country
2005
Recognition of sales
The method of recognizing sales is determined according to
ias 18 and depends on the nature of the underlying transaction:
For business involving panels, the GfK Group recognizes its
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 valued by 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 flow 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 anticipated losses on
orders in progress when they can be anticipated.
In syndicated business the method of recognizing sales depends
on the empirical estimate of the profitability of the respective
survey:
If a profit from the survey is probable, it is evaluated as an
ad hoc research order.
If it is not yet sufficiently certain that enough purchasers will
be found for a survey, the sale is recognized corresponding to
the accumulated costs. As soon as it is certain that the value in
orders exceeds the costs, there is a switch to the above method
of recognizing sales.
If there is no empirical data for the relevant survey or a comparable survey and there are also no orders from clients to
ensure that costs are covered, no sale is recognized. The costs
are taken to the income statement. As soon as clients have
subscribed to the survey, there is a switch to the above method
of recognizing sales.
GfK_104
All transactions and balances between the companies of the
GfK Group which are included in the consolidated financial
statements are eliminated when preparing the consolidated
financial 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 significant.
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 also include personnel expenses from the stock option
program and scheduled amortization on additional assets
identified on acquisitions from purchase price allocation.
Impairments of non-current assets are included under other
operating expenses.
Research and development
Research and development costs are recorded as expenses at the
time they are incurred and shown under cost of sales due to their
secondary importance.
Development costs incurred within the GfK Group, particularly in
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 defined preconditions have been
cumulatively fulfilled. These include the technical viability of
project completion, the scheduled completion and use and the
usefulness to the company or saleability of the intangible asset.
Future economic benefits and the availability of the necessary
technical, financial and other resources to complete the project
should 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.
Tax on income from ongoing business activity comprises current
and deferred taxes.
Current taxes are calculated by the companies within the
GfK Group according to current 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 financial 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 sufficiently
likely to achieve enough taxable profit to use the tax benefit.
If deferred tax assets already recorded are not expected to be
recognized within the foreseeable future, carrying values are
adjusted.
Tax on items recognized directly in equity are not included in
the income statement.
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.
To calculate the diluted earnings per share, the average number
of shares is adjusted by the options as yet not exercised and which
are in the money as of the reporting date.
Operating income
Stock options for employees and executives
of the GfK Group
Operating income in the GfK Group comprises the gross income
from sales, less cost of sales, selling and general administrative
expenses, and net other income comprising other operating
income and other operating expenses.
Selected executives of the GfK Group are entitled to convert part of
their variable remuneration into share options in GfK ag (stock
options). The option term is five years; options cannot be exercised
until two years after issue.
To determine adjusted operating income, items which are not
included in the income-based management variable of the
GfK Group, are excluded from operating income.
The GfK Group applies ifrs 2 for stock options issued after
November 7, 2002 which had not yet lapsed as of January 1, 2005.
This remuneration which is to be settled with equity instruments,
is valued at the fair value at the grant date. The obligation is
entered as expense in the income statement whilst the counter
entry is made under capital reserve.
Other financial income and expenses
In all other business transactions sales are only recognized
once the work has been completed and invoiced.
Other financial income and expenses include interest income and
expenses and remaining financial income.
Interest expense is not capitalized in the GfK Group. Interest is
recorded as income or expense at the time it is incurred.
GfK_105
Accounting policies
Intangible assets
Goodwill
Other intangible assets are entered in the balance sheet at
amortized cost and are subject to scheduled, straight line
amortization. The useful life of software and other intangible assets
is generally three to ten years.
For goodwill arising before January 1, 2004, the GfK Group
has made use of the option in ifrs 1 whereby, under the
transition to ifrs, goodwill which was accounted for according
to the accounting principles previously applied, can be adopted.
Before converting to ifrs, the GfK Group prepared its financial
statements according to the United States Generally Accepted
Accounting Principles (us gaap).
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 first consolidation
is used to calculate the goodwill at initial recognition. Subsequent
measurements are based on the mean rate as of 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 six cash generating
units corresponding to the business areas, matching the internal
Group control. The cash generating units are Custom Research,
Retail and Technology, Consumer Tracking, Media, HealthCare
and 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 attributable fair value
less costs to sell or the value in use if higher. These are calculated
by using the discounted cash flow procedure based on anticipated
future cash flow from the relevant current five-year plan. The growth
in cash flow after the five-year period is taken into account by
reducing the discount rate by one percentage point.
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 financing costs.
The resulting discount rate is 6.65 % on average. The discount rate
takes into account the respective equity and country risks as well as
tax advantages from the external financing of the cash generating
unit concerned.
Interest on borrowing is not capitalized. Intangible assets with an
indefinite useful life are subject to an impairment test at least once
a year.
Software
As a rule, software developed by companies in the GfK Group is
used internally for analyzing and processing marketing research
data. In some cases, it is destined for external users and was
written specifically 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.
In addition to internally generated software, the item software also
includes software acquired for internal use.
Miscellaneous intangible assets
Miscellaneous intangible assets mainly include licenses and panel
set-up costs.
Panel set-up costs involve capitalized development costs for setting
up new panels or extending an existing panel. 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 from the preparation and application phases and
maintenance costs for current panels cannot be capitalized.
They are included in expenses.
The amortization period is measured by the contract term or the
useful life, whichever is shorter.
Panel set-up costs are only subject to scheduled amortization
if they are directly incurred in conjunction with a specific,
fixed-term current client order. Other panel set-up costs are
not subject to any scheduled amortization; their useful life is
indefinite. These intangible assets are subjected to an impairment
test at least once a year.
Impairments on intangible assets are recorded if the recoverable
amount falls below the amortized costs. The recoverable amount is
defined as the higher of the two sums of the attributable fair value
less costs to sell or value in use of an asset.
106_GfK
GfK_106
Goodwill arising from the capital consolidation of subsidiaries and
that transferred from subsidiaries’ financial statements into the
consolidated financial statements is reported by the GfK Group
under intangible assets.
Tangible assets
Primary financial instruments, particularly securities
Tangible assets are valued at cost less cumulative depreciation.
Interest on borrowing is not capitalized. Cumulative depreciation
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.
Loans issued, receivables and liabilities are valued at amortized costs
where these are not linked to hedge transactions.
Shares in companies which do not qualify as subsidiaries or
associated companies are also shown as primary financial
instruments at cost.
The GfK Group normally applies the useful life periods shown
in the following table:
Useful life
in years
Administrative buildings
50
it equipment
3 to 5
Cars and other vehicles
5
Office equipment
Office furniture
3 to 5
10 to 13
Lease arrangements are entered on the balance sheet according
to ias 17 with either a finance 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
finance 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 leasing 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 the fulfillment 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 financial expenses.
With an operating lease, the leased asset is entered on the balance
sheet of the lessor. The lessee records the regular payments as
rental expenses.
Financial instruments
Pursuant to ias 32 and ias 39, financial instruments are
contracts which result in a financial asset with one company
and a financial liability or an equity instrument with another.
In the GfK Group, financial 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 financial instrument
was entered into.
Borrowing costs are recorded as expenses within the period in
which they were incurred.
Available-for-sale securities are securities which are not treated
as part of the trading securities. The GfK Group only shows
trading securities under short-term securities; all other securities
are reported under other financial assets as available-for-sale
securities. GfK has resolved not to report any securites as “held to
maturity”.
Available-for-sale securities are initially stated at acquisition
cost plus transaction costs if any. Subsequent measurement is
based on the fair value as at the reporting date, whereby each
security is considered separately. The change in value based on
the subsequent measurement at fair value is not entered on the
income statement but offset directly against income and expense
recognized directly in equity. This applies to changes in value due
to fluctuations in fair price to which securities are generally
subject.
However, if there are any objective signs of impairment, impairment must be recorded. An objective sign of impairment may
be, for example, the inability of the securitor to pay. In this case,
unrecognized losses previously shown under equity are transferred
from equity into total income for the period. The impairment is
included in the item, other financial expenses in the income
statement.
Short-term securities and fixed-term deposits
Securities held as current assets represent the trading securities
destined for short-term sale. They are valued at fair value on the
balance sheet date. Unrealized profits and losses are taken to
income and reported under other financial income or expenses on
Fixed-term deposits have a remaining term of more than three
months but less than a year. Fixed-term deposits with a remaining
term of less than three months are shown under liquid funds; fixedterm deposits with a remaining term of over a year are shown
under other financial assets. They are entered at fair value.
Derivative financial instruments, hedge accounting
The GfK Group concludes transactions throughout the world in
various international currencies, which may involve currency risks.
In addition, short-term investments, investment in securities and
borrowing from banks take place in various currencies and can
result in risks due to changes in exchange rates, rates of interest
and market prices.
GfK_107
Asset
Available-for-sale securities
Accounting Policies
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. No derivative
financial instruments are held for trading purposes.
Derivative financial instruments are reported at cost as asset or
liability at the time of the transaction and subsequently valued at
fair value.
Changes in the fair value of derivative financial instruments used in
hedge accounting are recorded differently, depending on whether
the instrument is a fair value hedge, cash flow hedge or net
investment hedge.
If the derivate financial 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 fair value of both the hedged
item and the derivative financial instrument are taken to the income
statement.
With changes in the fair value of cash flow hedges used to hedge
transactions against risks from fluctuations in future payment
flows, the unrecognized profits and losses are initially entered in
the income and expense recognized directly in equity. However,
this is only permissible if the derivative is intended and suitable
for hedging cash flow.
Once the hedged transaction affects the income statement, the
profits and losses accumulated in the income and expense
recognized directly in equity must be released with impact on
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 are recorded in income and
expense recognized directly in equity as is the case for cash flow
hedges.
The prerequisite for using any hedge accounting is that the link
between the hedged item and the hedging instrument must be
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.
If the hedge is considered highly effective, the unrecognized
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.
Generally, the part of the changes in fair value not covered by the
hedged item is taken to the income statement.
If the prerequisites for reporting an item as a hedging instrument
(hedge accounting) are not met as per the regulations in ias 39, the
changes in fair value of the derivatives are immediately charged to
108_GfK
Fair values of forward currency transactions, combined interest
rate and currency swaps and interest rate swaps are determined
on the basis of market conditions as of the reporting date.
Inventories
Inventories are valued at the lower of cost and net realizeable
value.
Trade receivables
Trade receivables include both invoiced and non-invoiced
receivables. They are stated at nominal value or, in the case
of specific risks, at the lower attributable value taking into
account a valuation allowance. Non-invoiced receivables can
arise in the context of the valuation of sales.
Impairment
If an asset is impaired and is therefore depreciated, the cost of
impairment is included in the income statement.
Liquid funds
The liquid funds contain cash on hand and in banks as well as
liquid investments with a remaining term of less than three months.
Income and expense recognized directly in equity include changes
in Group equity which have no impact on the income statement and
which do not involve deposits by shareholders or distributions to
shareholders.
These changes result from exchange rate differences from capital
consolidation and valuation at equity, unrecognized profits and
losses from available-for-sale securities, actuarial gains and losses
from provisions for pensions and unrecognized income and
expenses from derivative financial instruments.
Provisions
In principle, provisions are set up when an obligation to a third
party, will probably result in an outflow 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
and the discount sum is material.
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 fixed-income corporate bonds.
Payments for defined contribution plans are stated as expenses
when they occur.
GfK_108
More detailed information on currency and interest rate risks
is provided in the risk report, which is part of the management
report.
Actuarial gains and losses on defined benefit plans are recorded
directly in income and expense recognized directly in equity in
exercise of the option in ias 19.
Financial liabilities
Financial liabilities include interest-bearing liabilities relating to
financing, particularly loans from banks and other lenders, liabilities
under financial leases and other interest-bearing liabilities. They
are stated at the present value if they are interest-free or low-interest.
Further valuation is carried out at amortized cost using the effective
interest rate method.
As regards reporting on the business combination due to the
acquisition of nop World as of June 1, 2005, it may be necessary to
carry out a significant adjustment to assets and liabilities within a
year of the date of first consolidation, i. e. by May 31, 2006, based
on updated estimates. Any such adjustment will have no effect on
It would affect other liabilities which include balances owed to
the previous owners of nop World, and compensation claims and
liabilities against the previous owners linked to current taxes
relating to the period prior to the date on which the GfK Group
acquired nop World. The maximum necessary adjustment is
4.8 % of the purchase price of nop World.
Trade payables, other liabilities
Interest-free or low-interest non-current liabilities are discounted
and stated at present value, where the discount amount is
significant.
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 flow statement shows the changes to the balance sheet
item Liquid funds resulting from cash flows from operating activity,
investing activity and financing activity.
The cash flow 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 flow statement and the arithmetical
changes in the consolidated financial statements, the schedule of
movements in non-current assets and other information in the
notes to the financial statements.
Estimates
To a certain extent, estimates and assumptions cannot be avoided
in the consolidated financial statements. They may affect assets and
liabilities as well as contingencies on the balance sheet date and
the income and expenses for the financial 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 key estimates on future development of the GfK Group and its
economic environment are shown in the “Outlook” section of the
management report.
Fully consolidated companies
As at December 31, 2005, the scope of consolidation in accordance
with ifrs includes 16 (2004: 13) German and 127 (2004: 87) foreign
subsidiaries in addition to the parent company.
The table below shows the changes in fully consolidated subsidiaries
between January 1, 2005 and December 31, 2005:
Fully consolidated
subsidiaries
(No.)
01.01. 2005
Additions
Disposals
Germany
13
3
0
16
Abroad
87
45
–5
127
100
48
–5
143
Total
31.12.2005
As of January 1, 2005, Beyen Marktforschung GmbH, Düsseldorf,
Beyen Corporation of America, Inc., Niagara Falls, usa and
Beyen Corp of Canada Inc., Niagara Falls, Canada, were fully
acquired. These companies operate in the Retail and
Technology division.
gfk gral-iteo tržne raziskave d.o.o., Ljubljana, Slovenia,
GfK Belgrade d.o.o., Belgrade, Yugoslavia and GfK bh d.o.o.,
Sarajevo, Bosnia-Herzegovina, were included in the consolidated
financial statements for the first time as of January 1, 2005.
These companies were not previously consolidated and operate
in the Custom Research division.
GfK Media Research Services GmbH (formerly mmo Media-MarketObserver GmbH), Vienna, Austria, was also consolidated for the
first time on January 1, 2005 and included in the consolidated
financial statements. This company belongs to Media.
The participation in Caribou Lake Software, llc, Minneapolis, usa,
was increased in January 2005 from 19.9 % to 69.8 %. It has been
included in the consolidated financial statements as an affiliated
company since January 1, 2005. The company, which operates in
the Custom Research division, was previously reported as an
associated company.
GfK Equity Research Inc., Boston, usa, which operates in the Retail
and Technology division was established on February 28, 2005.
A 51% participation in GfK Research Dynamics, Inc., Mississauga,
Ontario, Canada, which operates in the Custom Research division,
was acquired in April 2005.
GfK_109
Trade payables and other liabilities are stated at repayment
value.
In addition, in April 2005 GfK North America Investment GmbH,
Nuremberg was founded. GfK North America Holding GmbH,
Nuremberg, (formerly GfK Erste Vermögensverwaltungs GmbH)
was included in the consolidated financial statements for the
first time on June 1, 2005. Both companies operate as holding
companies for North American business.
Acquisition of nop World
With effect from June 1, 2005, GfK acquired nop World with a
100 % participation. The group comprises 47 companies with
the main registered offices in the uk, usa and Italy. Of these,
30 companies are fully consolidated. The following companies are
grouped under Custom Research:
On May 1, 2005, a 51% participation was acquired in Adimark s.a.,
Providencia, Santiago, Chile, and its Chilean subsidiaries, Adimark
Investigaciones de Mercado Ltda., Providencia, Santiago, and
Collect Investigaciones de Mercado s.a., Providencia, Santiago.
The Adimark Group belongs to the Custom Research division.
Dealtalk Limited, London, uk
E. Friedman Marketing Services, Inc., Harrison, New York, usa
GfK Automotive, llc, Southfield, Michigan, usa
GfK nop, llc, New York, New York, usa
GfK nop Field Interviewing Services Limited, London, uk
GfK nop Mystery Shopping Services Limited, London, uk
Previously unreported intangible assets totaling eur 8,080
thousand were disclosed as part of the acquisition procedures
outlined.
GfK nop Services Limited, London, uk
GfK nop Telephone Interviewing Services Limited, London, uk
The assets and liabilities which were adopted during the acquisition
of these consolidated companies are shown in the following table.
Liquid funds
Liabilities and provisions
asw Delaware llc, Wilmington, Delaware, usa
Barterstore Limited, London, uk
The total purchase price for the acquisitions mentioned here
was eur 8,221 thousand over the reporting period; this figure
includes incidental acqusition costs. The purchase price was
covered by liquid funds. This produced goodwill of eur 4,708
thousand relating to the Custom Research and Retail and
Technology divisions. Goodwill represents mainly the expertise of
the employees of these companies, which cannot be capitalized
separately as such.
Current assets
afi Investments Limited, London, uk
asw Investments, Inc., Wilmington, Delaware, usa
The acquisition of the nop World on June 1, 2005 is dealt with in
a separate section below.
Non-current assets
afi Holdings llc, Wilmington, Delaware, usa
Prior to the As of the acquimerger
sition date
1,184
9,264
2,675
2,675
788
788
5,627
5,627
Interactive Research Limited, London, uk
mil Research Group Limited, London, uk
National Opinion Polls Limited, London, uk
nop Automotive, Inc., Farmington Hills, Michigan, usa
nop World Limited, London, uk
Numbers Data Processing Limited, London, uk
Numbers (Holdings) Limited, London, uk
GfK do brasil ltda., São Paulo, Brazil, was merged with indicorp
participações s.a., São Paulo, Brazil with effect
from January 1, 2005.
Also with effect from January 1, 2005, var finance et
reinvestissement – v.f.r. sas, La Valette-du-var, France,
was merged with Institut Français de Recherche-i.f.r. s.a.,
Viroflay, France.
In December 2005, indicator gfk consultoria e processamento
de informações ltda., Santana do Pamaíba, Brazil, was merged
with indicator gfk s.a. São Paulo, Brazil.
Aspemar-GfK Société Anonyme, Brussels, Belgium was deconsolidated because it was liquidated on December 23, 2005.
Inform Business Development Pty. Ltd., Sydney, Australia, was
deconsolidated on December 31, 2005 as it no longer conducts any
operating business.
110_GfK
Numbers Market Research Limited, London, uk
Roperasw Europe Limited, Leatherhead/Surrey, uk
Roper Starch Worldwide, llc, Harrison, New York, usa
GfK us Holdings, Inc., Wilmington, Delaware, usa, acts as a
holding for the American nop companies.
GfK us Healthcare Companies lp, East Hanover, New Jersey, usa,
and Strategic Marketing Asia, Ltd., Bala Cynwyd, Pennsylvania,
usa, belong to the HealthCare division.
Mediamark Research Inc., New York, New York, usa, operates in
the Media division.
GfK Eurisko S.r.l. and Risposta Srl, both of Milan, Italy, and GfK
nop Limited, London, uk, operate in Custom Research, Media and
HealthCare.
As part of the acquisition of nop World, GfK Malta Holding Limited
and GfK Malta Services Limited, both of Floriana, Malta, and GfK
nop u.k. Holding Limited, London, uk, were founded and were
consolidated for the first time with effect from June 1, 2005. They
operate as holding or financing companies for the British, Italian
and German nop companies.
GfK_110
The cumulative income from these companies for the period during
which they belonged to the GfK Group totals eur 718 thousand.
In addition, the following three minority holdings were acquired
as part of the purchase of nop World and are reported under
associated companies:
ggc-nop Limited, London, uk
Infotab Research GmbH, Munich
Starch Research Services Limited, Toronto, Ontario, Canada
The purchase price for the acquisition of nop World totaled
eur 578,792 thousand. This includes eur 10,434 thousand in
incidental acquisition costs. eur 583,983 thousand was covered
by liquid funds, while additional discounts on acquisition costs
totaling eur 5,191 thousand will be refunded. This amount is
reported under other current assets. The resulting goodwill totals
eur 467,519 thousand and relates to the segments listed above.
As a result of additional adjustments to the purchase price until
May 31, 2006, adjustments may occur regarding the initial
reporting of the merger in the balance sheet.
The level of the purchase price is mainly due to the staff of
nop World who have been taken over by the GfK Group through
the acquisition. Also acquired were mainly well established,
profitable surveys, brands and customer relations. As the workforce
does not represent a capitalizable asset, most of the purchase price
has been shown as goodwill.
Previously unreported long-term intangible assets totaling
eur 163,552 thousand and current assets amounting to
eur 931 thousand were disclosed as part of the acquisition of
nop World.
Liquid funds
Liabilities and provisions
Associated companies
The consolidated financial statements as of December 31, 2005
report on participations in 22 (2004: 21) associated companies.
The following table shows the changes in associated companies
between January 1, 2005 and December 31, 2005.
Associated
companies
(No.)
01. 01. 2005
Additions
Disposals
1
1
0
2
Abroad
20
3
–3
20
Total
21
4
–3
22
Germany
31.12.2005
Three associated companies were also added through the acquisition of nop World. These are shown in a separate section.
Prior to the As of the acquimerger
sition date
707,305
870,857
143,295
External sales, total assets and annual income from these companies
together total less than 4 % of the corresponding values in the
consolidated financial statements.
144,226
5,977
5,977
444,589
444,589
As nop World was consolidated for the first time on June 1, 2005,
it is covered for seven months in the consolidated financial statements as of December 31, 2005. It contributed around eur 200
million to the consolidated sales of the GfK Group in 2005, while
net income of nop World for the same period totals eur 4,925
thousand.
The participation in Caribou Lake Software, llc, Minneapolis, usa,
was increased in January 2005 from 19.9 % to 69.8 %. It is now
included in the consolidated financial statements as a consolidated
affiliated company.
The participation in iha·ims Health GmbH, Hergiswil, Switzerland,
was sold.
European Flash Surveys eeig, Brussels, Belgium was liquidated on
September 30, 2005.
Other participations
The number of other participations fell by comparison with the
prior year from eight to seven.
Non-current assets
The GfK Group did not include 56 (2004: 42) companies in the
consolidated financial statements during the reporting year
because they were of minor significance for the net assets, financial
position and income of the Group.
A minority participation was acquired in Research Matters ag,
Basel, Switzerland, on June 1, 2005.
The assets and liabilities which were assumed during the
acquisition of nop World are shown in the following table.
Current assets
Companies of minor importance
GfK ag largely funded the purchase price from borrowing. It
also raised equity through a 10% increase in capital with no
subscription right. On June 2, 2005, GfK placed 3.15 million
shares with institutional investors at a price of eur 28.70, as
part of accelerated bookbuilding. This raised eur 90.3 million.
GfK_111
The income statement was prepared according to the cost of sales
method. Expenses are shown by operations.
Non-operating depreciation/amortization primarily includes
impairments on hidden reserves from purchase price allocation and
impairments on software.
Miscellaneous other expenses mainly include expenses on
courses, conferences and seminars (eur 158 thousand), charitable
donations (eur 156 thousand) and maintenance (eur 128
thousand).
1. Sales
Sales are broken down according to type as shown in the table
below.
4. Personnel expenses
2004
2005
659,646
916,360
Sales in respect of third parties, not yet invoiced
3,769
17,435
Sales in respect of related parties and groups
1,243
1,794
Sales in respect of affiliated companies
1,612
992
Sales in respect of third parties, invoiced
Sales in respect of associated companies
Sales
2,801
754
669,071
937,335
The expense items in the income statement include the personnel
expenses listed in the table below.
Wages and salaries
Social security contributions and expenses for
pensions
Personnel expenses
2004
2005
233,128
310,861
49,596
62,287
282,724
373,148
The breakdown of sales according to division and region is shown
under segment reporting under 29.
5. Adjusted operating income
The breakdown of other operating income is shown in the following
table.
Exchange gains
Further offsetting and transitory items
2004
2005
6,537
8,184
208
422
Income under rental and lease agreements
553
419
Income from share and asset deals
145
396
Income from previous reporting periods
650
231
Income from related parties and groups
0
186
151
126
Income from insurance recoveries
Income from the cancellation of valuation adjustments
on other assets
Income from legal liability, fines, compensation
Miscellaneous
572
11
1,295
16
480
305
10,591
10,296
Integration costs in connection with acquisitions
Integration costs of eur 15,658 thousand were reported as
expenses which are connected both materially and time-wise
with the acquisition of nop World. These include primarily
settlements and bonuses as well as travel costs, expenses, rental
obligations and auditing and advisory costs.
The integration costs are split across the items in the income
statement as shown in the table below.
2005
Cost of sales
725
14,024
Miscellaneous other operating income mainly includes
income from the disposal of tangible and intangible assets
(eur 135 thousand).
Integration costs
909
15,658
Amortization and impairment of additional assets identified
on acquisitions
3. Other operating expenses
Other operating expenses includes the items shown in the
table below.
2004
2005
Exchange losses
3,894
13,448
Non-operating depreciation/amortization
2,121
8,319
0
746
Expenses by related parties and groups
Losses from the disposal of tangible and intangible assets
113
683
Expenses under rental and lease agreements
284
552
Expenses from prior reporting periods
Expenses from legal liability, fines and compensation
Expenses on bank charges
Expenses from indemnity payments
Miscellaneous
112_GfK
1,251
342
6
244
264
225
1,086
0
658
1,471
9,677
26,030
Amortization on disclosed hidden reserves from purchase price
allocation breaks down into scheduled amortization of eur 11,302
thousand, which is included in the cost of sales, and impairments
totaling eur 4,600 thousand, which are included under other
operating expenses. Further details are given in Note 11 under
Other intangible assets.
GfK_112
2. Other operating income
Adjusted operating income is the internal management indicator
for the GfK Group. It is derived from the operating income whereby
the following items are excluded.
The rise in interest payments to banks is mainly linked to
borrowing to acquire nop World.
Personnel expenses for share-based payments and long-term
incentives
Personnel expenses shown here include tranches 4, 5 and 6 of the
stock option program for GfK Group managers. The total value of
each tranche is notified two years to the day after the options are
issued, which corresponds to the period between issue and the
initial right to exercise options.
9. Tax on income from ongoing business activity
The main elements of the Group’s tax on income are shown in
the table below.
2004
2005
26,030
Taxes on income from other periods
– 391
– 324
Taxes based on tax losses not previously utilized
– 226
– 459
Taxes based on temporary differences previously
unaccounted
Other expenses on tax on income
Current tax expenses
less:
Unscheduled amortization on
disclosed hidden reserves as part of purchase price allocation
4,600
Integration costs
909
20,521
From the the formation or conversion of temporary
differences
From changes in tax rate/new taxes
Based on previously unaccounted temporary
differences
Other income from participations includes earnings from the
disposal of the participation in iha·ims Health GmbH, Switzerland,
totaling eur 24,285 thousand and earnings from the disposal of the
participation in mmxi Switzerland GmbH, Switzerland, amounting
to eur 775 thousand.
7. Financial income
Financial income breaks down as shown in the following table:
2004
2005
Interest income from bank balances
885
1,135
Other interest income from third parties
369
690
Interest income from related parties
170
51
16
20
Interest income from affiliated companies
Interest income from associated companies
215
0
Interest income
1,655
1,896
Other financial income
2,451
437
Financial income
4,106
2,333
In the prior year, other financial income comprised write-ups on
loans to bwv Holding ag, St. Gallen, Switzerland, totaling
eur 2,358 thousand.
– 46
28,971
26,055
28,142
3,671
3,676
Deferred tax expenses/income:
Based on previously non-utilized tax losses
6. Other income from participations
– 34
26,706
Other deferred tax expenses
Deferred tax expenses/income
Taxes on income from ongoing business activity
–5
– 47
– 30
– 137
–6
–1
– 1,456
– 6,950
2,174
– 3,459
28,229
24,683
The tax advantage from the utilization of tax loss carryforwards during
financial year 2005 amounts to eur 2,760 thousand (2004: eur 652
thousand). The balance sheet for 2005 records a deferred tax claim
due to non-utilized tax losses totaling eur 14,167 thousand (2004:
eur 4,097 thousand). In addition, there is a deferred tax claim from
deductible tax credit amounting to eur 9,210 thousand.
The rate used to calculate deferred taxes for the German companies
with registered offices in Nuremberg comprise corporation tax of
25 % plus the solidarity surcharge of 5.5 % on the corporation tax
debt paid as well as the effective trade tax rate of 13.449 %. As
in 2004, this results in a tax rate of 39.824% as of December 31,
2005.
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-specific tax
rates.
The derivation of remaining other operating expenses from other
operating expenses is shown in the table below.
2005
Current tax expenses/income:
8. Financial expenses
Financial expenses break down as shown in the table below.
2004
2005
2,804
16,324
Interest expenses under finance lease agreements
925
814
Other interest expenses due to third parties
456
607
Interest and similar expenses due to banks
Write-ups on discounted debts
44
286
Interest expenses due to related parties
77
117
Interest expenses due to affiliated companies
Interest expenses
Other financial expenses
Financial expenses
33
5
4,339
18,153
361
932
4,700
19,085
GfK_113
Total tax rate
Expected income tax
2004
2005
39.824 %
39.824 %
32,403
36,718
Increase/reduction in income tax debt resulting
from:
Differences in tax rates
Tax-exempt income from the disposal of
participations
Change in permanent differences
Other tax-exempt income
Change in temporary differences not
recognized as deferred tax assets
Additional tax payments or refunds from
previous years
Adjustment of deferred tax due to tax rate
changes
Income from participations valued at equity,
not eligible for tax
31.12.2004
– 4,866
– 10,040
31.12.2005
Goodwill
1,590
741
1,936
2,454
Tangible assets
769
1,565
Financial assets
189
5,246
Other non-current assets and
deferred items
0
175
Non-current assets
4,484
10,181
Inventories
1,366
1,549
160
1,739
0
0
Receivables and other current assets
Liquid funds
45
0
1,571
3,288
0
– 3,954
Current assets
4,141
6,125
7,030
6,922
11,171
13,047
152
– 1,470
– 2,009
– 565
245
– 229
– 391
– 60
–5
– 47
– 148
41
Other non-deductible expenses
527
864
Consolidation of taxable income from
participations
330
997
Deviating tax base
The deferred taxes result from the balance sheet items shown in
the following table:
944
1,206
Other
1,047
1,222
Tax expenses reported
28,229
24,683
144
1,978
29,460
29,945
Current liabilities
29,604
31,923
Tax loss carryforwards and tax credits
4,097
23,377
50,927
81,816
Goodwill
– 3,828
– 71,706
– 4,586
– 5,871
Tangible assets
– 8,624
– 8,868
Financial assets
– 888
– 6,084
Deferred tax assets
deferred items
Non-current assets
Inventories
Receivables and other current assets
Liquid funds
Current assets
– 57
– 1,584
– 17,983
– 94,113
– 102
– 49
– 16,631
– 26,185
–5
–3
– 212
– 236
– 16,950
– 26,473
– 1,169
– 36
– 1,731
– 810
– 2,900
– 846
Current liabilities
– 16,059
– 847
– 322
– 1,115
– 16,381
– 1,962
– 54,214
– 123,394
Net deferred tax liabilities
– 3,287
– 41,578
Deferred taxes are reported in the balance sheet as shown in the
following table.
31.12. 2004
Deferred tax assets
Net deferred tax liabilities
31.12. 2005
10,085
43,186
– 13,372
– 84,764
– 3,287
– 41,578
Taxes on items posted directly to equity amounted to eur 967
thousand (2004: eur 57 thousand).
As of December 31, 2005, the Group had domestic tax loss carryforwards amounting to eur 4,559 thousand (2004: eur 1,944
thousand) and foreign tax loss carryforwards of eur 43,075
thousand (2004: eur 16,797 thousand). The domestic loss carryforwards can be carried forward without restriction in terms of
114_GfK
GfK_114
The table below contains a reconciliation of the anticipated income
tax expense and the income tax expense stated in financial year
2005. To calculate the anticipated tax expense, the tax rate of the
parent company, GfK ag, valid during the financial year and which
corresponds to that used for the calculation of deferred tax for
the German companies with registered offices in Nuremberg, is
multiplied by the pre-tax result.
The estimate of their future realizability governs the recognition
and valuation of deferred tax assets. This is dependent on the
generation of future taxable profits during accounting periods
in which tax valuation differences are reversed and tax loss
carryforwards can be applied.
In view of expected future performance, it is assumed probable that
the relevant benefits of the recognized deferred tax assets will be
realized according to the provisions of ifrs. Deferred tax assets are
also stated for companies which have been or are in a loss-making
situation, if there is sufficient assumption of future profits.
The items for which no deferred tax assets have been stated are
shown in the table below.
11. Intangible assets
The movement in intangible assets is shown in the table
below.
Other
intangible
assets
Total:
intangible
assets
202,942
69,048
271,990
– 3,498
– 2,469
– 5,967
4,475
30,265
34,740
29,121
9,861
38,982
Disposals
– 642
– 7,994
– 8,636
Reclassifications
– 700
700
0
As of December 31, 2004
231,698
99,411
331,109
As of January 1, 2005
231,698
99,411
331,109
17,543
10,534
28,077
513,411
178,353
691,764
Acquisition and
manufacturing costs
Brought forward as of January 1, 2004
Exchange rate changes
Change in scope of consolidation
Additions
31.12. 2004
31.12. 2005
173
324
5,782
5,570
Additions
5,955
5,894
Disposals
Temporary differences
Tax losses as yet not utilized
Goodwill
16,154
Reclassifications
Of these tax losses not recognized as deferred tax assets, an
amount of eur 3,773 thousand lapses within the next five years;
the remaining eur 1,797 thousand has no time limit on its use.
The GfK Group reports deferred tax liabilities on retained profits
from foreign subsidiaries where these profits are distributable and
are not to remain permanently invested in the subsidiaries.
41,643
82,900
– 351
– 1,006
1,000
190
1,190
Additions
9,734
9,734
Disposals
– 7,945
– 7,945
1,478
1,478
Weighted average of shares outstanding
– non-diluted –
31,366,611 33,486,383
Weighted average of shares outstanding
– diluted –
– 57
57
0
41,545
44,806
86,351
41,545
44,806
86,351
1,179
1,177
2,356
311
5,008
5,319
Additions
18,963
18,963
Disposals
– 794
– 794
Impairment
7,641
7,641
59,352
31,680,182 33,965,548
Earnings per share in eur
1.35
1.77
Earnings per share (diluted) in eur
1.34
1.75
1,080,801
– 655
Earnings per share are shown in the table below.
42,345
6
301,995
41,257
Reclassifications
2005
6
778,806
Impairment
2004
30,930
– 1,085
Cumulative amortization
10. Earnings per share
Consolidated total income attributable to equity
holders of the parent
14,776
– 1,085
Reclassifications
1
1
43,035
76,802
119,837
161,685
27,405
189,090
190,153
54,605
244,758
date and amount. Of the foreign loss carryforwards, the amount
of eur 19,305 thousand may be carried forward without limit or
for a period of more than 15 years, and the amount of eur 6,265
thousand is available for carryforward until 2015.
Carrying amounts
The average number of shares is diluted by 479,165 shares from
issued, not yet exercised options under tranches 3 to 6, which are
in the money as at the reporting date. This results in a dilution
effect of eur 0.02 per share.
190,153
54,605
244,758
735,771
225,193
960,964
GfK_115
The allocation of goodwill to cash-generating units is shown in the
table below.
31.12. 2004
eur m
31.12. 2005
eur m
Custom Research
60.6
351.1
45.7
57.4
Consumer Tracking
3.6
3.6
Media
34.0
167.0
HealthCare
46.3
156.7
Other
Goodwill
0.0
0.0
190.2
735.8
An impairment test is carried out at least once a year to determine
whether and to which extent existing goodwill is to be impaired.
No impairment adjustment was required as a result of the
impairment test for 2004 and 2005. There were therefore no
impairment expenses for either financial year.
The breakdown of other intangible assets is shown in the table
below.
31.12.2004
31.12.2005
Disclosed hidden reserves from purchase price
allocation
Surveys
Brands
Customer relations
Panels
Contracts
Order book
Software
Panel set-up costs
Cost of sales
Selling and general administrative costs
Total
0
90,914
167
44,352
23,389
41,087
1,198
4,990
0
3,287
0
1,734
24,874
29,779
338
3,003
4,639
6,047
54,605
225,193
The item Software includes software developed internally totaling
eur 13,022 thousand (2004: eur 10,049 thousand).
Expenses for research activities is recorded as expenses for the
reporting period. Development costs which did not result in
a capitalizable intangible asset are also recorded as expenses.
Panel set-up costs only have a limited useful life if the panel was
created for a specific, fixed-term client order. Capitalized panel
set-up costs amounting to eur 2,571 thousand have an unlimited
useful life.
Brands which have been identified and capitalized as part of the
purchase price allocation, also have an unlimited useful
life, as they are established brands with a high degree of brand
recognition.
The recoverability of panel set-up costs and brands with an
unlimited useful life was reviewed as part of an impairment test.
This indicated no need for an impairment adjustment.
2004
2005
8,192
18,112
899
851
2,121
7,641
11,212
26,604
Impairment expenses total eur 7,641 thousand (2004: eur 1,478
thousand). eur 3,041 thousand relates to impairment losses for
software: during the year under review, it was discovered that the
economic life of a software license in the HealthCare division is
no longer applicable. In addition, an impairment loss of eur 3,877
thousand relates to customer relations which had been stated as part
of the purchase price allocation; this relates to the reduction in the
volume of orders from major clients in the Custom Research and
HealthCare divisions. In order to assess the recoverable value, the
higher of the attributable fair value less costs to sell and service
value is determined and compared with the carrying value. The
impairment is recognized in the income statement under other
operating expenses.
Intangible assets of major importance are shown in the table below.
31.12. 2004
31.12. 2005
Goodwill
137,425
515,892
Software
6,040
7,430
0
86,192
Surveys
Sundry intangible assets
116_GfK
The amortization and impairment expenses charged on intangible
assets are included in the following items on the income statement:
Customer relations
Brands
22,849
29,735
0
29,196
The above table shows the sum total of all intangible assets with an
individual value of more than eur 5 million.
The major portion of goodwill refers to nop World companies. The
useful life of goodwill is indefinite and it is not subject to scheduled
amortization.
Software mainly involves internally developed startrack analysis
and production system in the Retail and Technology division. The
remaining useful life amounts to nine years.
The surveys, customer relations and brands stem primarily from
the purchase price allocation as part of the acquisition of nop
World. The remaining useful life for the surveys is ten years. The
customer relations are written down over 12 or 19 years at an
individually determined customer churn rate of between 7.5 %
and 15 %. Brands have an unlimited useful life and are not
subject to scheduled amortization. The allocation of brands to the
divisions is shown in the table below.
31.12. 2004
31.12. 2005
Custom Research
0
26,454
Media
0
14,188
HealthCare
167
3,710
Brands
167
44,352
GfK_116
Goodwill
12. Tangible assets
Leasing
The movement in tangible assets is shown in the table below.
The GfK Group leases office 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 (finance lease).
Otherwise the lease installments are carried as an expense
(operating lease).
Acquisition and
manufacturing costs
Land and
buildings
and assets
in course of
constructions
Fixtures
and
fittings
Tangible
assets
47,822
136,230
184,052
290
– 193
97
687
687
Changes in scope of consolidation
Additions
751
13,217
13,968
Disposals
– 74
– 6,925
– 6,999
– 122
122
0
48,667
143,138
191,805
191,805
Reclassifications
48,667
143,138
– 25
2,178
2,153
815
36,236
37,051
Additions
4,737
18,216
22,953
Disposals
– 61
– 8,720
– 8,781
Reclassifications
– 1,075
1,069
–6
53,058
192,117
245,175
Cumulative depreciation
13,823
104,220
118,043
90
– 125
– 35
394
394
Additions
1,293
13,343
14,636
Disposals
– 74
– 6,183
– 6,257
–9
9
0
15,123
111,658
126,781
Reclassifications
Operating lease
The payments listed in the table below under operating lease
agreements were carried as expenses:
Minimum lease payments
2004
2005
15,237
20,632
Contingent lease payments
Less sub-lease payments received
Lease payments
342
352
– 519
– 627
15,060
20,357
The future minimum lease payments under non-terminable
agreements are due as of December 31, 2005 as shown in the
table below.
Payable
31.12.2005
Within one year
27,339
Between one and five years
64,936
After more than five years
35,713
Future minimum lease payments under operating leases
15,123
111,658
–9
1,288
1,279
117
25,544
25,661
126,781
Additions
1,262
16,053
17,315
Disposals
– 28
– 7,231
– 7,259
678
678
Impairment
Reclassifications
127,988
– 154
153
–1
16,311
148,143
164,454
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. Where contingent lease
payments are to be made, these are determined based on energy
costs incurred.
Finance lease
The carrying values of capitalized leased items as of December 31,
2005 are shown in the table below.
33,999
32,010
66,009
33,544
31,480
65,024
33,544
31,480
65,024
Land
36,747
43,974
80,721
Buildings
31.12. 2004
Fixtures and fittings
Impairment expenses relating to tangible assets total eur 678
thousand (2004: eur 0 thousand). These related to impairments
on leasehold improvements due to moving to new premises. The
expense is shown in the income statement under other operating
expenses.
A land charge has been entered on a piece of land with company
buildings in Nuremberg with a carrying value of eur 9,992
thousand for a bank guarantee on a loan. The carrying value
of the secured liability as at the reporting date was eur 3,942
thousand.
Capitalized leased items
Carrying amounts
31.12. 2005
141
659
11,323
10,693
1,987
1,290
13,451
12,642
The determination of the present value and due date of future
minimum lease payments as of December 31, 2005 is shown in the
table below.
Payable
Minimum
lease installment
Less
interest
Present value
minimum lease
installment
Within one year
2,188
– 677
1,511
Between one and five years
7,002
– 2,455
4,547
After more than five years
Future minimum lease installment
9,971
– 796
9,175
19,161
– 3,928
15,233
GfK_117
Other investments
In the reporting year there were no conditional lease
instalments to be recognized as expenses. There were no
sublease arrangements under finance leases.
The breakdown of other investments is shown in the table
below.
The main finance leases held by the GfK Group are for
buildings and part buildings as well as fixtures and fittings.
In April 1992, GfK ag entered into a sale-and-leaseback
agreement for part of the office building at Nordwestring 101,
Nuremberg, which qualifies as a finance lease. The lease
was concluded for 30 years with an original obligation
amounting to eur 13,012 thousand. The lease agreement
can be terminated in March 2012 with the option to acquire
the building.
Shares in affiliated companies
The finance lease liability is eur 15,233 thousand (2004:
eur 16,391 thousand) of which eur 1,511 thousand (2004:
eur 1,582 thousand) has a remaining term of under one year.
Other investments
Loans to affiliated companies
Loans to associated companies
Other loans
Available-for-sale securities
31.12. 2004
31.12. 2005
3,566
1,478
385
295
4,064
1,682
618
0
1,952
138
739
652
0
101
11,324
4,346
Long-term fixed deposits
Shares in affiliated companies, other participations
Participations in affiliated, non-consolidated companies and
other participations are reported at amortized cost as no
market prices exist for them and other methods of realistically
estimating the fair value are not practicable.
13. Investments
The GfK Group’s investments in associates are shown in the
list of shareholdings attached to these Notes as an appendix.
The table below gives a summary of financial information on the
key investments in associates which have been valued at equity in
the consolidated financial statements.
Further information on the GfK Group’s shares in affiliated
companies and other participations is provided in the list of
shareholdings in the appendix to the Notes.
Loans
2004
2005
44,381
42,350
Liabilities
20,153
16,969
Sales
70,784
56,220
Total income for period
15,119
10,823
During the reporting period there were no pro rata losses on
investments in associates.
The equity valuation was based on financial statements with
differing reporting dates for the following associated companies:
Media Focus (arge), Hergiswil, Switzerland
(November 30, 2005)
Loans to affiliated companies include value-adjusted loans
with a disbursed amount of eur 2,978 thousand (2004: loans to
affiliated and associated companies eur 5,118 thousand). The
accumulated write-downs on these loans amount to eur 2,341
thousand (2004: loans to affiliated and associated companies
eur 3,276 thousand). There were no impairment expenses in
the year under review.
Securities
The table below shows an overview of the acquisition costs, fair
value and unrealized profits and losses of the portfolio of availablefor-sale securities.
org-GfK Marketing Services (India) Private Limited, Mumbai,
India (March 31, 2005)
Bearer instruments
31.12. 2004
31.12. 2005
Acquisition costs
736
654
Sports Tracking Europe, b.v., Amstelveen, Netherlands
(September 30, 2005)
Fair value
739
652
Unrealized profit
54
38
Unrealized loss
10
13
npd Intelect, l.l.c., Port Washington, New York, usa
(September 30, 2005).
The carrying amount for these investments and the income from
associates are not materially affected by including these financial
statements with differing reporting dates. Preparing interim
financial statements for this purpose would therefore have been
uneconomical.
118_GfK
The bearer instruments held in the portfolio at the end of the year
have a remaining term of more than one year.
Each security is valued separately.
GfK_118
Assets
14. Other non-current assets and deferred items
17. Liquid funds
The breakdown of other non-current assets and deferred items is
A breakdown of liquid funds is shown in the table below.
31.12. 2005
1,683
1,631
Deferred items
930
740
Guarantee deposits
681
607
Assets from pension plans
409
440
Amounts owed by related parties
155
71
Other assets
130
92
3,988
3,581
deferred items
Trade receivables break down as shown in the table below.
31.12. 2004
31.12. 2005
118,055
214,017
Invoiced trade receivables
owed by affiliated companies
1,277
765
owed by associated companies
308
127
owed by other participations
334
0
7
75
119,981
214,984
23,157
43,649
owed by related parties
Non-invoiced trade receivables
Less: valuation allowances
Trade receivables
31.12. 2004
31.12. 2005
43,587
72,345
4,383
6,640
Cash equivalents and
fixed-term deposits with a remaining term
of less than 3 months
Cash and cheques
Liquid funds
727
614
48,697
79,599
The rise in liquid funds is largely due to the companies in nop World
joining the GfK Group.
Of the liquid funds, eur 2,551 thousand (2004: eur 220 thousand)
are not freely available. The restriction on availability is mainly
due to the fact that these liquid funds serve as rental deposits.
15. Trade receivables
owed by third parties
Credit with banks
143,138
258,633
– 4,962
– 5,422
138,176
253,211
Impairment expenses amounted to eur 1,643 thousand (2004: eur
1,465 thousand). They are shown in the income statement under the
item selling and general administrative expenses.
18. Other current assets and deferred items
The other current assets and deferred items break down as shown in
the table below.
Deferred items
Advance payments, credit balances and
refund claims
Short-term income tax receivables
31.12.2004
31.12.2005
5,473
10,806
240
10,013
6,800
8,683
35
6,172
Prepayments made on tangible and
intangible assets
2,605
4,595
Receivables from tax and other
authorities
1,275
3,668
Derivative financial instruments
Amounts owed by debtors
(Suppliers with debit balances)
874
1,388
Guarantee deposits
847
1,092
16. Securities and fixed-term deposits
Other amounts owed by affiliated
companies
1,350
1,033
A breakdown of securities and fixed-term deposits is shown in the
table below.
Other amounts owed by associated
companies
633
825
Amounts owed by employees
466
699
Amounts owed by related parties
516
639
Other receivables under share and asset deals
185
491
Stationery and office supplies and gifts
223
437
Receivables from insurance companies
109
177
Other current assets
523
2,598
Securities
Fixed-term deposits with a remaining term of
between 3 and 12 months
31.12. 2004
31.12. 2005
6,488
3,762
0
1,760
6,488
5,522
The trading securities reported under current assets are carried
at fair value. During the year under review, write-downs of
eur 5 thousand (2004: eur 69 thousand) and write-ups of
eur 118 thousand (2004: eur 21 thousand) were recognized
in the income statement under the item Other financial expenses
and income.
22,154
53,316
Less: valuation allowance
– 1,064
– 1,034
Other current assets and
deferred items
21,090
52,282
Receivables from insurance companies
31.12. 2004
The increase in deferred items is mainly due to supplier invoices
paid in advance for which the service has not yet been provided.
In the period under review, advance payments, credits and refund
claims include refund claims against the previous owners of
nop World. These include, for example, tax payments relating
to the period before nop World belonged to the GfK Group.
GfK_119
The increase in derivative financial instruments is also due to
the acquisition of nop World. They serve to hedge interest rate
risks and are valued according to the marking-to-market method
as at the reporting date. The derivatives reported here are part
of a cash flow hedge.
Prepayments made largely relate to internally developed software
under development. Upon completion of the software, which
is planned for 2007, it will be reclassified under other intangible
assets and subject to scheduled amortization.
Impairment expenses on other current assets and deferred items
amounted to eur 27 thousand (2004: eur 39 thousand). This is
included under other operating expenses.
19. Total equity
Subscribed capital
The subscribed capital of GfK Aktiengesellschaft was increased
on the basis of the capital increase and by exercising stock options.
Based on the resolution of the Supervisory Board dated June 2,
2005, the subscribed capital was increased by eur 13,370 thousand
from authorized capital.
In the stock option program, in 2005, the holders of option
rights from tranches 2002/2007 and 2003/2008 were entitled
to acquire new no-par shares in GfK ag in the ratio 1:1.2 against
submission of the option rights. In 2005, 147,848 options were
exercised from the tranche 2002/2007 for the acquisition of 177,417
no-par shares at the price of eur 20.11. From the tranche 2003/2008,
207,554 options were exercised for the acquisition of 249,064
no-par shares at the price of eur 15.44.
As a result of the measures above, the subscribed capital, capital
reserve and the number of no-par bearer ordinary shares issued
developed as shown in the table below.
Capital increase through issue
of new shares
Subscribed
capital
Capitalreserve
eur’000
eur’000
Number of
no-par shares
issued
Units
133,734
92,000
31,474,522
76,939
3,146,689
13,370
Costs of capital increase
Issue of new shares through
conversion of options from
contingent capital
– 2,735
1,813
5,601
148,917
174,402
Cumulative personnel expenses
for stock options
426,481
2,597
35,047,692
GfK Aktiengesellschaft has authorized capital 2002 and authorized
capital 2005 i. By resolution of the Annual General Meeting on
June 13, 2002, the Management Board was authorized, with the
consent of the Supervisory Board, to increase the capital against
cash and/or contributions in kind on one or more occasions by
up to a total amount of eur 21,000 thousand until June 12, 2007
(authorized capital 2002). At the Annual General Meeting on May 24,
2005, the Management Board was authorized, with the consent of
the Supervisory Board, to increase the capital against cash and/or
contributions in kind on one or more occasions by up to a total
amount of eur 45,867 thousand until May 23, 2010, whereby the
shareholders subscription rights may be excluded (authorized
capital 2005 i). A part sum of eur 13,370 thousand has been utilized
from the authorized capital 2005 i by the capital increase in 2005
excluding subscription rights. A sum of eur 32,497 thousand therefore remains from the authorized capital 2005 i.
120_GfK
GfK_120
The 35,047,692 no-par shares are fully paid-up. Each shareholder
is entitled to receive dividends on his shares in accordance with
the respective profit distribution resolution. Each share grants one
vote at the Annual General Meeting.
The aim of the contingent capital increase is to grant option rights
to the senior management team of the company and its affiliated
companies within the meaning of Section 15 ff. of the German
Stock Corporation Act. Acquiring option rights is contingent
on the achievement of a minimum target, to be agreed with each
individual entitled person, for their immediate area of responsibility.
The number of options available to each entitled person is based on
the variable salary component advised to each entitled person
in an individual letter, which can be replaced by options in the ratio
of 1:2.5 by waiving a portion of the promised bonus. The actual
number of options for all seven tranches (2000/2005, 2001/2006,
2002/2007, 2003/2008, 2004/2009, 2005/2010, 2006/2011) results
from division of this figure by a factor of 4.5.
The option right can be exercised at the earliest two years after
issue and only within the defined exercise windows. The exercise
price is 120% of the average price of GfK shares in the Xetra
closing auction on the five trading days prior to the issue of the
option rights, or 120% of the price of GfK shares in the Xetra
closing auction on the date of issue if this is higher than the
aforementioned average price.
The term of the option rights of the 2000/2005 tranche ended on
December 31, 2005. During this term this tranche was not in the
money and therefore no options were exercised. They lapsed on
December 31, 2005.
In June 2002, the shareholders consented to cancel the existing
authorization to grant option rights and approved a new
authorization and an adjustment of the contingent capital.
The new option terms deviate from those of the first two tranches
of the programme as follows:
Members of the Management Board of GfK ag may hold a
maximum of 30% of the option rights being granted (previously
20%).
Options may not be exercised during the 14 days before publication
of quarterly, half-yearly, annual or provisional annual figures. In
addition, the company may set further periods at its discretion
during which options may not be exercised. For each of the
tranches to be issued, the exercise price to acquire a share is the
share’s average Xetra price between the respective previous
accounts press conference and the Annual General Meeting or, if
higher, the price of the share in the Xetra closing auction on the
trading day on which the respective tranche is issued, plus a
premium of 5%. Trading days are those days on which the
Frankfurt stock exchange determines a price for the company’s
shares.
The application of the new option terms has been resolved for
tranche 3 (issue and exercise) and for all subsequent tranches.
At the start of 2005, the contingent capital for exercising options
amounted to eur 12,768 thousand, equivalent to 3,004,204 no-par
bearer shares. In 2005, a total of 426,481 no-par shares were
issued through the exercise of 147,848 options from the 2002/2007
tranche and 207,554 options from the 2003/2008 tranche. As a
result of these transactions, the company’s contingent capital
reduced to eur 10,954 thousand as at December 31, 2005,
corresponding to 2,577,723 no-par bearer shares.
Stock options
As a result of the capital increase in 2004 out of company funds
and the issue of bonus shares in the ratio 5:1, the subscription right
in respect of the issued options of tranches one to six increased
from one share to 1.2 shares per option. The exercise prices were
adjusted accordingly. As of tranche 7, to which GfK executives
were invited to subscribe after the capital increase in 2004, one
option again corresponds to one subscription right.
Detailed information on the individual tranches is given in the table
below.
Of which
Manage- Exercise
ment
price
Board
in eur
Exercisable
from
to
Options
exercised
Shares
issued
Term
Total
options
1
2000/
2005
380,130
76,512
46.00 20021) 20051)
expired
expired
2
2001/
2006
366,690
85,215
34.75 20031) 20061)
–
–
3
2002/
2007
380,300
85,215
20.11 20042) 20072)
256,544
305,545
4
2003/
2008
457,319
149,9993)
15.44 20052) 20082)
207,554
249,064
5
2004/
2009
418,720
128,1103)
25.81 20062) 20092)
–
–
6
2005/
2010
454,141
122,2213)
31.92 20072) 20102)
–
–
7
2006/
2011 585,3664)
146,6644)
to be announced 20082) 20112)
–
–
1) Exercise of options commences after the Annual General Meeting. Options may be
exercised during the following periods: from the third trading day on the Frankfurt stock
exchange after the Annual General Meeting of GfK ag until June 30, (inclusive) and from
the first day after publication of the half-yearly figures until September 30, (inclusive) and
from the first day after publication of q3 figures until 14 days before the financial year ends
(inclusive).
2) Exercise of options commences after the Annual General Meeting. Options may not be
exercised during the 14 days before publication of quarterly, half-yearly, annual or preliminary annual figures. The company may set further periods during which options may
not be exercised.
3) Including members of the Management Board who have since left the company.
4) Subscribed; entitlement to options does not yet exist; options not yet issued.
In June 1999, the shareholders passed a resolution for a contingent
increase of eur 5,120 thousand in the company’s subscribed
capital by issuing up to 2,000,000 new no-par bearer shares. At the
Extraordinary General Meeting of September 3, 1999, a resolution
was passed to relate profit entitlement to the start of the financial
year in which options are exercised.
Tranche
Contingent capital
GfK_121
The development of the stock options issued is shown in the
table below.
2004
Number
of
options
Balance at start
of year
1,610,764
The fair value of the stock options issued by GfK in the years 2000
to 2005 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
2005
Weighted
average
price
in eur/share
28.43
Number
of
options
Weighted
average
price
in eur/share
1,897,548
Tranche
1
2
3
4
5
6
27.55
Implicit volatility on
issue date
33 %
39 %
39 %
51 %
34 %
26 %
5.2 %
4.8 %
4.7 %
2.2 %
3.2 %
2.5 %
5.58
5.59
5.55
5.55
5.54
5.55
Options
granted
421,805
25.81
454,141
26.60
Risk-free investment
interest1)
Exercised
108,696
20.11
355,402
17.39
Term in years
Forfeited
26,325
32.56
1,000
25.82
Expired
–
–
380,130
46.00
Fair value per option
right in eur
16.42
12.92
7.63
5.70
6.66
5.04
Repayments
–
–
–
–
Balance at
year-end
Total value per
program
6,390
4,854
2,902
2,654
2,809
2,289
1,897,548
27.55
1,615,157
25.19
Exercisable at
year-end
1,018,424
35.04
740,211
27.37
1) Current yield to maturity on German bearer debentures issued by the public sector, mean
remaining terms of over five years up to and including six years
The average weighted remaining term for the stock options
amounted to 3.1 years (2004: 3.1 years) as of December 31, 2005.
During financial year 2005, the stock options program involved
personnel expenses of eur 2,597 thousand (2004: eur 1,958
thousand).
The development in the individual items of equity capital is shown
in the table below.
Income and expense
recognized directly in equity
Capital
reserve
Retained
earnings
66,872
87,944
49,851
525
2,098
Total recognized
income and expense
Shares issued
Capital increase from
company funds
42,345
66,337
90
14
– 116
692
Total
Minority
interests
Total
equity
204,771
19,016
223,787
34,860
10,401
45,261
2,623
2,623
– 66,337
Dividends to
shareholders
Other changes
– 8,075
14
Actuarial
gains/losses on
defined benefit
plans
– 6,531
– 6,531
– 6,625
– 13,156
1,958
159
2,117
– 3,882
– 1,765
As of
December 31, 2004
133,734
92,000
19,487
– 8,075
28
– 26
692
237,840
18,910
256,750
As of
January 1, 2005
133,734
92,000
19,487
– 8,075
28
– 26
692
237,840
18,910
256,750
59,352
23,194
– 10
3,732
– 3,388
79,135
9,140
88,275
15,183
79,805
Total recognized
income and expense
Shares issued
Dividends to
shareholders
Other changes
As of
December 31, 2005
122_GfK
148,917
– 3,745
94,988
94,988
– 9,442
– 9,442
– 7,708
– 17,150
2,597
– 728
1,869
1,825
3,694
174,402
68,669
404,390
22,167
426,557
15,119
18
3,706
– 3,745
– 2,696
GfK_122
As of
January 1, 2004
Subscribed
capital
Foreign Change in
Change in
exchange fair value fair value of
Valuation of
trans- of equity
cash flow hedges of net
lation securities
hedges
investments
diffe- available(effective
in foreign
rences
for-sale
portion)
subsidiaries
Proposed appropriation of profits
In accordance with the German Stock Corporation Act, the dividend
that may be distributed is determined by the retained profit
reported in the annual financial statements of GfK ag. These
are prepared under the provisions of the German Commercial
Code (hgb). The retained earnings and the retained profit of GfK
ag reported under the provisions of the hgb are available for
distribution in their entirety to shareholders. The capital reserve
may not be distributed to shareholders.
A proposal will be made to the General Meeting to distribute a
dividend of eur 11,566 thousand (eur 0.33 per no-par share) to
shareholders out of the retained profit for 2005 of eur 50,016
thousand and to transfer eur 38,450 thousand to retained earnings.
20. Long-term provisions
The breakdown of long-term provisions is shown in the table
below:
Pension provisions
Other long-term provisions
31.12. 2004
31.12. 2005
27,565
38,443
6,246
15,849
33,811
54,292
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 retrospectively from January 1,
2004 whereby actuarial gains and losses are not recognized in the
income statement but in income and expenses recognized directly
in equity. In the year under review, actuarial losses of eur 4,839
thousand (2004: gains eur 745 thousand) were reported in this way.
The amount of income and expenses recognized directly in equity
totaled eur 4,087 thousand (2004: gains eur 750 thousand) as of
December 31, 2005. The figures do not include deferred taxes.
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 averages).
2004
2005
Discount rate
4.01 %
3.59 %
Rate of salary increase
2.12 %
2.29 %
Fluctuation rate
0.29 %
0.35 %
Expected growth in pensions
1.10 %
1.07 %
Expected long-term return on plan assets
4.27 %
4.21 %
The mortality rates for the GfK companies in Germany were taken
from the 2005g guideline tables by Dr. Klaus Heubeck.
The breakdown of pension provisions reported in the balance sheet
is shown in the table below.
Pension provisions
For defined contribution plans, which are entirely funded by
external resources, there are no further obligations for GfK
companies other than paying contributions. Expenses for defined
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 defined contribution plans is mainly
the length of service with the company and the wage or salary
level of the employee. However, the benefits can vary depending
on the legal, fiscal and economic framework conditions of the
country concerned. The pension expenses for defined contribution
plans amounted to eur 12,267 thousand (2004: eur 6,700 thousand)
in financial year 2005.
The pension obligations arising from defined benefit plans are
reported according to the projected unit credit method. Actuarial
reports are produced annually by independent actuaries for defined
benefit plans. The actuaries apply statistical and actuarial calculations
to determine the assets and provisions to be carried on the balance
sheet. Determining the fair value of defined benefit plans and
pension assets is based on empirical and statistical estimated
values such as, for example, future wage rises, mortality rates or
expected long-term returns on the plan assets.
31.12.2004
31.12.2005
Present value of unfunded obligations
25,070
36,358
Present value of funded obligations
36,255
41,473
Present value of overall obligations
61,325
77,831
– 33,760
– 39,388
Net present value of obligations
27,565
38,443
Pension provisions
27,565
38,443
Fair value of plan assets
Other assets
Net amount reported on balance sheet
0
0
27,565
38,443
The movement in the present value of the defined benefit obligation
during the period under review is shown in the table below.
2005
Present value of defined benefit obligation as of January 1
61,325
Changes in the scope of consolidation
5,582
Current service cost
3,045
Interest cost
2,599
Participant contributions
Actuarial gains and losses
Benefits paid
Past service cost
Present value of defined benefit obligation as of December 31
Pension provisions within the GfK Group are based on both defined
contribution plans and defined benefit plans for each company.
949
5,352
– 462
– 2,373
1,814
77,831
GfK_123
Other long-term provisions
The table below shows the movement in plan assets:
2005
Fair value of plan assets as of January 1
The movement in other long-term provisions in the period under
review is shown in the table below.
33,760
Changes in the scope of consolidation
2,360
Expected return on plan assets
1,582
Actuarial gains/losses
831
Personnel
– 122
As of 01.01.2005
5,590
Employer contributions
1,604
Currency effects
3
51
Participant contributions
949
Benefits paid
– 1,576
Fair value of plan assets as of December 31
39,388
The plan assets for funded pension obligations comprise shares,
fixed-rate securities and real estate. They do not include either
financial instruments issued by GfK companies or real estate used
by consolidated companies. The fair value of plan assets essentially
includes financial instruments amounting to eur 28,917 thousand
and real estate not utilized by GfK or other assets worth eur 6,282
thousand.
General projected return on plan assets were determined based
mainly on empirical data from the past 10 years. The projected
return in 2005 on plan assets reported in the financial statement
is an average 4.21%. The actual yield from plan assets in 2005
amounted to eur 2,413 thousand.
According to GfK estimates, contributions of around eur 1,335
thousand will be paid into funded pension plans over the coming
year.
The amounts reported in the income statement break down as
Service cost
Interest costs
Expected return on potential plan assets
Past service cost
2004
2005
2,141
3,045
2,176
2,599
– 1,320
– 1,582
2,181
1,814
Profit/loss from curtailment or discontinuation
of the pension plan
– 536
0
Pension expenses
4,642
5,876
Change in the scope
of consolidation
Write-ups to discounted
provisions
Potential
contractual
losses
Sundry
Total
656
6,246
334
19
356
7,955
29
8,035
263
263
Additions/transfers
2,488
668
3,156
Utilization
– 757
– 39
– 796
– 10
– 29
– 39
Release
Reclassifications
– 425
– 974
27
– 1,372
As at 31.12.2005
6,940
7,578
1,331
15,849
Personnel provisions comprise mainly commitments relating to
employees leaving and from provisions for anniversary expenses
based on contractual agreements.
The provision for potential contractual losses relates to two longterm rental contracts at non-standard terms. The larger contract
in terms of amount has been in place since 2002 at a company in
nop World. The remaining term is 10 years. The agreed rent has
been compared with current and estimated future market rates and
the amount in excess has been recognized in the provision. As this
is an interest-free commitment, the present value has been used.
The discount was calculated at an interest rate of 7%. The net
amount of the commitment as at the reporting date was eur 11,151
thousand (usd 13,197 thousand). In 2005, a write-up on this discount
amounting to eur 263 thousand was applied. If the future market
price for rents does not follow the trend assumed for recognition of
this provision, the provision will be adjusted accordingly.
Sundry other long-term provisions mainly include commitments to
authorities and insurance companies amounting to eur 1,235
thousand (2004: eur 601 thousand).
The pension expenses are included mainly in cost of sales, selling
and general administrative expenses and in other financial expenses.
The funding status is shown in the table below.
Pension liabilities
Pension assets
Funding status
2004
2005
61,325
77,831
– 33,760
– 39,388
27,565
38,443
Empirical adjustment in liabilities
26.92 %
Empirical adjustment in assets
16.67 %
124_GfK
GfK_124
21. Long-term and short-term interest-bearing financial
liabilities
The breakdown of financial liabilities is shown in the table below.
of which with a remaining term of less than
1 year
of which with a remaining term of between
1 and 5 years
of which with a remaining term of over
5 years
Liabilities under finance leases
1 year
1 and 5 years
5 years
31.12.2004
31.12.2005
45,355
548,419
9,865
3,984
5,821
3,942
assignment of receivables
1,199
821
0
505,803
17
0
87
87
0
25
transfer of investments
3,161
1,424
Liabilities under leases secured by
16,391
15,233
transfer of movable assets
other collateral
transfer of inventories
1,582
1,511
assignment of receivables
Secured liabilities
4,654
9,175
1 year
4,454
4,871
1 and 5 years
423
905
277
279
66,900
569,707
1 year
15,901
10,366
1 and 5 years
37,406
548,463
5 years
13,593
10,878
As of December 31, 2005, the weighted average interest rate for
amounts due to banks was 3.93 % (2004: 3.73 %).
The financial liabilities become due in the next five years and
thereafter, as shown in the table below:
22. Short-term provisions
The movement in short-term provisions during the year under
review is shown in the table below.
Personnel
As of
01. 01. 2005
Currency
effects
Sales
Sundry
Total
2,605
266
1,586
7,375
45
15
6
51
171
752
12
72
836
1,338
535
546
3,666
– 752
– 1,463
– 211
– 293
– 11
–5
– 314
– 27
– 30
1,372
558
1,171
8,012
2,918
54
Change in
scope of
consolidation
10,366
Potential
Authoriconties and
tractual insurance
losses companies
2007
110,270
2008
100,381
Utilized
– 1,619
2009
97,968
Release
–5
2010
239,844
Reclassifications
455
974
3,050
1,019
510,678
In addition to the collateralization of liabilities to banks, the
GfK Group has undertaken to meet certain covenants as part
of a syndicated credit facility. The key indicators measure net
indebtedness in relation to ebitda as well as interest expenses
in relation to ebitda. Both covenants were met by the GfK Group
Additions/
transfers
Subsequent years
0
9,102
To secure liabilities to banks amounting to eur 505,803 thousand
relating to funds borrowed for the acquisition of nop World,
participations in companies of nop World were transferred as
collateral to a security agent.
Other financial liabilities contain loan liabilities totaling eur 5,126
thousand (2004: eur 5,043 thousand) as of December 31, 2005, of
which eur 4,670 thousand (2004: eur 4,417 thousand) concerned
related parties. Notes payable of eur 333 thousand (2004:
eur 0 thousand) are included under other financial liabilities.
20061)
1,978
4,547
6,055
mortgages
543,011
5,154
5 years
31.12. 2005
32,329
10,155
Other financial liabilities
31.12. 2004
Amounts due to banks secured by
10,878
569,707
1) contains current account liabilities payable on demand in the context of credit lines
As of December 31, 2005, the GfK Group had confirmed credit lines
of eur 689,992 thousand (2004: eur 142,635 thousand), of which
eur 137,279 thousand (2004: eur 95,430 thousand) has not been
used. The weighted average rate of interest on the credit lines is
3.95% (2004: 3.79%).
As of
31.12. 2005
1,247
2,214
Amounts due to banks
There is collateral amounting to eur 510,678 thousand (2004:
eur 9,102 thousand) for amounts due to banks and liabilities
under leases of eur 563,652 thousand (2004: eur 61,746 thousand).
The collateral breakdown is as shown in the following table:
– 1,049 – 5,094
The short-term personnel provisions comprise commitments relating
to employees leaving and from provisions for anniversary expenses
as well as on other commitments to employees.
The short-term provisions for authorities and insurance companies
encompass mainly tax risks and commitments to social security
agencies.
Sundry other short-term provisions mainly comprise commitments
to suppliers and risks of litigation.
GfK_125
23. Trade payables
25. Notes to the consolidated cash flow statement
Trade payables break down as shown in the table below.
The cash flow statement is presented at the front of these notes.
It shows the changes in the GfK Group balance sheet item liquid
funds in 2005. In accordance with ias 7, a distinction is made
between cash flows from operating activity and from investing
and financing activity. The funding sources covered in the cash
flow statement comprise liquid funds. These encompass cash in
hand, cheques, cash equivalents and fixed-term deposits where
they are available within three months.
31.12. 2005
owed to third parties
owed to affiliated companies
28,801
82,276
1,188
owed to associated companies
403
427
241
owed to other participations
Trade payables
29
0
30,445
82,920
24. Other short-term liabilities and deferred items
The breakdown of the other short-term liabilities and deferred
items is shown in the table below.
31.12.2004
31.12.2005
Accounts payable to employees
36,176
58,237
Short-term liabilities from income taxes
19,377
29,675
Outstanding invoices from suppliers
3,556
25,153
Liabilities from other taxes
8,414
22,450
Other operating liabilities
8,503
17,484
Non-operating liabilities
3,379
9,761
664
3,766
6,331
1,700
Other accounts payable to related parties
194
693
Other accounts payable to affiliated
companies
204
382
Interest owed
Liabilities arising from special contracts
Other accounts payable to associated
companies
Sundry liabilities
Other short-term liabilities and
deferred items
79
79
166
1,040
87,043
170,420
Short-term liabilities against employees mainly comprise liabilities
for the payment of bonuses (eur 22,962 thousand), holiday and
flexitime claims (eur 13,384 thousand), social security (eur 9,582
thousand) and wages and salaries (eur 4,341 thousand).
Other liabilities from operating business mainly comprise amounts
owed to clients (eur 3,974 thousand), to interviewers (eur 3,829
thousand) and to households and respondents (eur 2,980 thousand).
This item also includes liabilities arising from projects amounting
to eur 2,993 thousand.
Liabilities from non-operating business mainly include rent
(eur 3,270 thousand), external costs associated with the financial
statements and legal and consultancy costs (eur 3,075 thousand),
outstanding invoices from non-operating business (eur 1,218
thousand) and liabilities to authorities (eur 1,102 thousand).
Liabilities arising from special contracts mainly comprise liabilities
from share and asset deals (eur 1,182 thousand) and commission
(eur 423 thousand).
126_GfK
The cash flow from operating activity amounted to eur 128,929
thousand (2004: eur 92,105 thousand). It was used in full
for investments which totaled eur 681,942 thousand (2004:
eur 84,626 thousand). Of this eur 643,489 thousand (2004:
eur 59,136 thousand) related to the acquisition of affiliated
companies and other business units. The main portion related
to the acquisition of nop World. To finance this investment, funds
were raised so that the cash flow from financing activity was
significantly positive at eur 550,254 thousand (2004: cash outflow
of eur 13,999 thousand).
Dividends totaling eur 17,150 thousand (2004: eur 13,156 thousand)
were paid to shareholders of GfK ag and to minority shareholders
in subsidiaries. The liquid funds in the balance sheet rose by eur
30,902 thousand (2004: down by eur 4,544 thousand).
During the year under review, interest totaling eur 1,752 thousand
(2004: eur 1,612 thousand) was received and interest totaling
eur 20,950 thousand (2004: eur 4,960 thousand) was paid.
Interest received is included in cash inflows/outflows from
investing activity whilst interest paid is allocated to financing
activity.
Tax on income and earnings in financial year 2005 resulted
overall in a cash outflow of eur 32,950 thousand (2004: eur
22,857 thousand).
The Group received payments totaling eur 1,497 thousand (2004:
eur 0 thousand) from the disposal or liquidation of subsidiaries.
This referred to GfK Belgium s.a. in Belgium and mmxi Switzerland GmbH in Switzerland.
Funds acquired through the purchase of subsidiaries amount to
eur 7,071 thousand (2004: eur 641 thousand).
26. Related parties
Related parties are persons or groups which could be influenced
by the GfK Group or could have an influence on the GfK Group.
On the basis of loans to GfK Group companies, there were liabilities
to The npd Group, Inc., Port Washington, New York, usa, a
cooperation partner of the GfK Group, amounting to eur 433
thousand as at the reporting date. This figure includes a loan
obligation of eur 385 thousand with a remaining term of more
than one year. In the reporting year, interest on loans totaled
eur 24 thousand. As at the reporting date there was also compensation obligation towards The npd Group of eur 588 thousand.
Total expenses for compensation obligations amounted to eur 746
thousand.
GfK_126
31.12. 2004
Trade payables
There were mainly loan obligations amounting to eur 4,130
thousand due to GfK-nürnberg, Gesellschaft für Konsum-,
Markt- und Absatzforschung e.V., Berlin, the majority owner of
GfK ag. The corresponding interest expenses amounted to eur 83
thousand. Sales of eur 1,154 thousand were achieved in 2005 with
GfK-nürnberg, Gesellschaft für Konsum-, Markt- und Absatzforschung e.V. As of December 31, 2005, trade receivables totaled eur
238 thousand.
Unless stated otherwise, amounts owed to and by related parties
have a remaining term of less than one year.
Receivables, liabilities, income and expenses with non-consolidated
affiliated companies, associated companies and with other
participations of the GfK Group are specified in the notes under
the respective item.
27. Contingent liabilities and other financial
commitments
31.12. 2005
order commitments
6,738
1,522
131
2,158
2,574
1,816
As of December 31, 2005, liabilities from maintenance, service and
license agreements, guarantees and sureties as well as order
commitments break down according to maturity as shown in the
following table.
< 1 year
> 1 year
163
1,359
0
2,158
1,014
802
Commitments arising from
maintenance, service and license agreements
guarantees and sureties
order commitments
The maximum default risk of the GfK Group amounts essentially to
the carrying value of all financial assets. The global activities of the
GfK Group and the large number of customers, which include many
renowned major companies, also reduce the concentration of the
default risk.
The carrying amount and fair value of the derivative financial
instruments of the GfK Group are shown in the table below.
31.12.2004
31.12.2005
Carrying
amount
Fair
value
Carrying
amount
Fair
value
33
33
4
4
2
2
6,168
6,168
Currency hedging
contracts
199
199
25
25
Interest rate hedging
contracts
254
254
70
70
Assets
In addition, there are the following contingent liabilities and
financial commitments:
GfK Aktiengesellschaft has given a guarantee vis-à-vis The npd
Group Inc., Port Washington, New York, usa, corresponding to its
participation in npd Intelect l.l.c., Port Washington, New York,
usa, held since January 1, 2001 via GfK Holding, Inc., Wilmington,
usa, to the effect that it assumes 25 % of the liability for the
contractual fulfillment of any commitments that may arise for The
npd Group, Inc. from the credit guarantee issued to a bank. This
credit guarantee was given by The npd Group, Inc. vis-à-vis the
bank in favor of npd Intelect, l.l.c., to secure a loan for usd 8,950
thousand. The loan commitment as at December 31, 2005 amounts
to eur 882 thousand (usd 1,044 thousand) and has a remaining
term of more than a year.
Currency hedging
contracts
Interest rate hedging
contracts
Liabilities
guarantees and sureties
The future commitments arising from lease agreements are
described in the section on leases under fixed assets.
The risk of default 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 with
a first rate credit-standing. Furthermore, the default risk is
reduced by spreading the transactions across several banks.
Commitments arising from
maintenance, service and license agreements
bwv Holding ag, St. Gallen, Switzerland, an affiliated, nonconsolidated company in the GfK Group, sold holdings in two
Swiss and one Austrian joint stock company by a contract dated
July 28, 2004. GfK ag has assumed a purchase price payment
obligation of up to eur 5,464 thousand (chf 8,500 thousand) to
cover acquisition claims arising from contractual infringements.
From July 28, 2009 the guarantee drops to eur 4,822 thousand
(chf 7,500 thousand) and ends by December 31, 2014 at the latest.
28. Financial instruments and derivatives
The contingent liabilities and other financial commitments that
are not carried as liabilities in the consolidated balance sheet
are reported at nominal values and break down as shown in the
following table:
31.12. 2004
In the years 2006 to 2011, purchase price payment obligations for
additional shares and purchase price adjustments of eur 33.203
thousand (2004: eur 66,326 thousand) will result from purchase
contracts concluded in connection with the acquisition of participations.
The carrying values of the primary financial instruments correspond to the fair values.
The derivative financial instruments are valued on a marking-tomarket basis in accordance with the market conditions as at the
reporting date. In addition, the Group’s own calculations are
checked for plausibility by the market assessments provided by
the banks.
As of December 31, 2005, the GfK Group’s portfolio included
currency hedging contracts to hedge against the Hungarian forint
and British pound. The nominal amount of the currency hedging
contracts totaled eur 7,173 thousand, whereby all contracts have
a residual term of less than one year. The currency hedging
transactions have a negative fair value of eur 25 thousand as of
the reporting date.
GfK_127
Segment reporting
In addition, as of the end of the financial year, the GfK Group had a
combined interest rate and currency swap with a nominal volume
of eur 5,667 thousand. Of this amount, eur 4,767 thousand has a
residual term of over one year. The fair value amounts to eur 4
thousand.
In the Retail and Technology division, GfK provides its clients in
the retail and industrial sectors with regular information services
gained from ongoing surveys and analyses of sales from electronic
and technical consumer goods in the retail industry in over 60
countries in the world.
As of the year-end, the GfK Group also held interest rate hedging
contracts in a total nominal amount of eur 441,982 thousand
and a positive attributable fair value of eur 6,098 thousand. Of this,
interest rate swaps totaling a nominal amount of eur 436,097
thousand were classified as cash flow hedges.
In the Consumer Tracking division, GfK provides its clients with
regular information services on consumer goods and services
based on continuous surveys and analyses of consumer buying
decisions and habits in 26 European countries.
2006
2,648
2007
97,691
2008
97,376
2009
92,482
2010
151,785
Nominal volume of interest rate swaps
441,982
In the case of derivatives utilized for cash flow hedging, changes in
fair value are reported as income and expenses recognized directly
in equity. For the year under review, the amount booked under
income and expenses recognized directly in equity amounted to
eur 6,202 thousand before tax (eur 3,732 thousand after tax).
To hedge net investments in foreign subsidiaries, the GfK Group
used the hedging instrument, net investment hedge. In the year
under review, effective changes in value of a loan in us dollars,
which was concluded as part of the acquisition of nop World, as
well as existing us dollar loan for the financing of GfK arbor,
llc and GfK v2, llc amounting to eur 6,223 thousand before tax
(eur 3,745 thousand after tax) was reported in income and
expenses recognized directly in equity.
Gains or losses from derivative financial instruments which are not
reported as part of the hedge accounting are posted in other
financial income or expenses.
In total, the income from these financial instruments amounted to
eur 369 thousand, while expenses amounted to eur 36 thousand.
29. Segment reporting
The primary classification of the GfK Group into segments is based
on the organization of the divisions corresponding to the products
and services offered. The secondary classification is by region.
The GfK Group provides services in the segments Custom Research,
Retail and Technology, Consumer Tracking, Media, HealthCare as
well as in Other.
In the Media division, GfK provides clients in over 20 European
countries and in the usa with information services based on
continuous studies as well as custom research surveys on the
intensity and nature of media usage and media offerings as well
as media acceptance.
In the HealthCare division, GfK provides its clients with
information and advisory services for the special pharmaceuticals
and healthcare markets in all countries in which the GfK network
is present.
These divisions are complemented by Other which comprises, in
particular, the head office services of GfK for its subsidiaries and
participations as well as its partners.
In the GfK Group, the internal control and reporting are largely
based on the same accounting and valuation methods as the
consolidated financial statements.
The Group measures the success of its segments by reference to
the adjusted operating income. The adjusted operating income
of a segment is determined on the basis of the operating income
net of the following income and expenses: integration costs linked
to company acquisitions, amortization on disclosed hidden reserves
from purchase price allocation, personnel expenses from sharebased payments and long-term incentives, other operating income
and the remaining other operating expenses. However, according
to ifrs, the operating income must be presented by segment.
In the following table, the column marked “Reconciliation” shows
those items which cannot be allocated to the individual segments.
These mainly include central functions such as administrative and
financial departments at the Group Head Office. Assets, liabilities,
income and expenses due to the nature of which no definite
allocation to segments is possible are also shown in the Transition
column.
Intersegment sales are covered exclusively by the area of Other.
Their elimination is also reported in the Reconciliation column.
In principle, internal Group transactions are recorded at the same
conditions as for third parties.
Information on segments for financial years 2004 and 2005 is
shown in the two tables below.
In the Custom Research division, GfK and its around 50 subsidiaries
in more than 30 countries provides its clients across the world with
information services for their operating and strategic decisions
relating to all areas of the marketing mix.
128_GfK
GfK_128
The total interest rate swaps mature in the next five years as shown
in the table below.
Sales to third parties
Internal sales
Operating income
Assets
Consumer Tracking
Media
2004
2005
2004
2005
2004
2005
2004
2005
249,432
416,444
187,001
209,618
94,405
100,334
62,237
96,150
0
0
0
0
0
0
0
0
16,338
14,481
47,237
52,504
5,845
3,823
8,083
14,519
271,225
176,390
650,465
98,957
110,652
32,822
42,370
61,432
Liabilities
74,658
186,886
53,714
62,389
32,334
39,030
16,575
79,629
Asset additions
46,862
470,238
17,271
20,544
5,451
10,280
3,900
82,151
6,144
11,668
5,053
5,778
2,394
3,068
2,586
7,141
0
4,194
65
0
0
0
0
611
324
6,764
242
3,411
123
1,636
80
1,555
271
235
2,007
2,539
0
0
186
16
7,042
5,372
2,154
3,440
0
0
245
94
2004
2005
2004
2005
2004
2005
2004
2005
68,094
107,267
7,902
7,522
0
0
669,071
937,335
Scheduled amortization/depreciation
Impairment
Material non-cash expenses
HealthCare
Internal sales
Other
Reconciliation
Group
0
0
18,517
22,083
– 18,517
– 22,083
0
0
6,089
4,846
– 5,983
– 9,500
0
0
77,609
80,673
Assets
68,523
215,656
32,817
30,969
92,281
174,415
563,222
1,495,752
Liabilities
16,343
41,412
12,594
13,378
100,254
646,471
306,472
1,069,195
Asset additions
14,542
69,257
351
130,228
0
0
88,377
782,698
Scheduled amortization/depreciation
1,775
2,774
6,418
5,849
0
0
24,370
36,278
Impairment
1,413
3,514
0
0
0
0
1,478
8,319
89
1,734
10
123
0
0
868
15,223
Operating income
Material non-cash expenses
2,309
258
– 240
134
0
0
4,533
3,182
2,459
2,059
520
523
0
0
12,420
11,488
Segment assets include all capitalized assets which can be assigned
to segments. These mainly involve tangible and intangible assets
and trade receivables. Assets which cannot be assigned mainly
include liquid funds, securities and tax amounts receivable.
Germany
Northern Europe
Segment liabilities mainly comprise trade payables, liabilities on
orders in progress, provisions and other liabilities. Financial and
tax liabilities are not split into segments.
Segment information by region for financial years 2004 and 2005
is shown in the table below.
Assets
Additions to assets
2004
2005
2004
2005
2004
2005
236,337
253,599
404,422
867,418
10,143
20,493
55,581
127,198
7,561
179,257
15,014
236,405
215,720
257,489
107,658
46,863
27,411
136,771
40,153
52,663
15,954
23,446
2,009
5,916
America
82,026
206,995
12,986
364,206
31,771
380,369
Group
39,254
39,391
14,641
14,562
2,017
2,739
669,071
937,335
563,222
1,495,752
88,365
782,693
Custom Research
GfK_129
33. Notes to the transition from us gaap to ifrs
During the reporting year, as in the prior year, none of the
segments recorded sales with any single client exceeding
10% of consolidated sales.
30. Pro forma statements in accordance with ifrs 3
Due to company acquisitions, the prior year’s figures cannot be
compared directly with the figures for the consolidated financial
statements as at December 31, 2005. To facilitate a comparison, the
influences resulting from changes are eliminated in the following
pro forma statements in accordance with ifrs 3.
The pro forma statement in the table below shows sales and the
consolidated total income for 2005 on the assumption that all
significant acquisitions concerning affiliated companies which took
place during the past financial year had already taken place on
January 1, 2005. In the pro forma statement, the following
transactions are taken into account:
The consolidated financial statements for financial year 2005 are
the first GfK Group financial statements to be prepared according
to the International Financial Reporting Standards (ifrs). The GfK
Group previously reported according to us gaap.
The principles of ifrs have been applied to the financial statements
as of December 31, 2005 and the comparative information as of
December 31, 2004 as well as to the opening balance sheet as of
January 1, 2004 (date of conversion).
The following overviews show a reconciliation of the total equity
and net income for the period at the date of conversion to ifrs as
applicable in the European Union and at the end of the last
financial period reported according to us gaap.
The first two tables show the reconciliation of the balance sheet
while the third table shows the reconciliation of net income for the
period.
First-time consolidation of nop World (see note on “Acquisition
of nop World”)
First-time consolidation of GfK Research Dynamics, Inc.,
Mississauga, Canada.
First-time consolidation of the Adimark Group comprising
Adimark s.a., Adimark Investigaciones de Mercado Ltda. and
Collect Investigaciones de Mercado s.a., all registered in
Providencia, Santiago, Chile.
2005
Sales
Total consolidated income
Deviation
Actual
Pro forma
Absolute
937,335
1,057,526
120,191
Percentage
12.8
67,517
61,964
– 5,553
– 8.2
31. Pending litigation and claims
for compensation
Neither GfK ag nor any of its subsidiaries were involved in any
significant legal disputes as at December 31, 2005.
32. Events after the balance sheet date
In its meeting on February 21, 2006 the Supervisory Board
extended the contract of Management Board member Petra Heinlein
by 5 years.
In April 2006, GfK signed a contract with agf on the gradual switch
of the tv audience panel to a new technology from 2007 onwards.
The additional agreement to the ongoing contract for tv audience
research runs from 2007 to 2011. As with the existing contract, the
agreement has an extension option to 2013.
130_GfK
GfK_130
US GAAP Reconciliation
IFRS
01.01.2004
Goodwill
161,773
IFRS
31.12.2004
– 88
161,685
b), e), l)
216,480
– 26,327
190,153
c), g), h)
27,363
43
27,406
a), c), g),
h), l)
29,160
25,445
54,605
Tangible assets
g), h)
66,095
– 87
66,008
a), g), h)
64,621
403
65,024
12,420
Investments
in associates
13,689
0
13,689
e), g)
12,621
– 201
Other investments
g)
16,071
– 72
15,999
g)
11,321
3
11,324
Deferred tax assets
h)
8,327
– 2,216
6,111
h)
7,962
2,123
10,085
deferred items
f), g), h)
f), g), h)
Total non-current assets
Inventories
Trade receivables
g)
Securities and fixed-term
deposits
Liquid funds
Other current assets and
deferred items
g), h)
3,002
290
3,292
296,320
– 2,130
294,190
1,406
0
1,406
125,487
357
125,844
g)
3,803
185
3,988
345,968
1,631
347,599
1,172
0
1,172
138,128
48
138,176
7,538
0
7,538
6,488
0
6,488
53,241
0
53,241
48,697
0
48,697
18,011
– 171
17,840
19,842
1,248
21,090
Total current assets
205,683
186
205,869
214,327
1,296
215,623
Total assets
502,003
– 1,944
500,059
560,295
2,927
563,222
IFRS
IFRS
g), h)
01.01.2004
Subscribed capital
66,872
0
66,872
133,734
0
133,734
87,098
846
87,944
m)
89,196
2,804
92,000
– 3,211
49,851
a), b), c), d),
f), g), h), j),
k), l), m), o)
33,730
– 14,243
19,487
– 2,887
2,990
103
e), h), k)
– 8,221
840
– 7,381
204,145
625
204,770
248,439
– 10,599
237,840
25,488
– 6,472
19,016
229,633
– 5,847
223,786
Capital reserve
m)
Retained earnings
c), d), f),
g), h), m),
n), o), p)
53,062
Income and expense recognized
directly in equity
q)
Equity attributable to equity holders
of the parent
Minority interests
c), d), f), g),
o), p)
Total equity
31.12.2004
c), d), e), f),
g), o)
16,347
2,563
18,910
264,786
– 8,036
256,750
f), h), n)
23,987
8,499
32,486
f), h)
26,809
7,002
33,811
Long-term interest-bearing
financial liabilities
g)
44,485
39
44,524
g), h)
50,960
39
50,999
a), c), d), e),
f), g), h), j), l)
13,759
– 387
13,372
Other long-term liabilities and
deferred items
c), d), e), f),
g), h), j), n)
g), h)
9,088
– 2,993
6,095
171
609
780
77,731
6,154
83,885
h), l)
243
1,240
6,897
99,422
58,140
– 50,765
7,375
h), n)
50,755
– 44,064
6,691
Short-term interest-bearing
financial liabilities
f), g)
22,122
54
22,176
15,893
8
15,901
Trade payables
g), p)
28,156
88
28,244
30,444
1
30,445
62,677
0
62,677
66,286
0
66,286
30,929
41,671
72,600
32,221
54,822
87,043
Current liabilities
194,639
– 2,251
192,388
202,984
4,066
207,050
Total liabilities
272,370
3,903
276,273
295,509
10,963
306,472
Total equity and liabilities
502,003
– 1,944
500,059
560,295
2,927
563,222
Other short-term liabilities and
deferred items
g), h)
h)
997
92,525
g), h)
h)
Assets
GfK_131
US GAAP
Reconciliation
IFRS
2004
Sales
b), g)
Costs of sales
a), b), c), f), g), i), k), l)
b), c), f), g), i), m), n)
a), g), i), n), p)
c), g), i), l), n), p)
Operating income
g)
ebit
Financial income
Financial expenses
g)
a), b), c), f), g), j), k),
l), p)
Net extraordinary income
a)
Attributable to minority interests
– 2,664
669,071
– 447,199
– 4,155
– 451,354
224,536
– 6,819
217,717
– 138,447
– 2,575
– 141,022
9,078
1,513
10,591
– 8,300
– 1,377
– 9,677
86,867
– 9,258
77,609
4,528
5
4,533
– 253
69
– 184
91,142
– 9,184
81,958
4,107
–1
4,106
– 4,705
5
– 4,700
90,544
– 9,180
81,364
– 31,080
2,851
– 28,229
4,038
– 4,038
0
63,502
– 10,367
53,135
52,592
– 10,247
42,345
10,910
– 120
10,790
63,502
– 10,367
53,135
a), c), f), g), l), o), p)
671,735
132_GfK
GfK_132
Notes on the main changes from us gaap in consolidation,
valuation and accounting principles
a) Consolidation of capital and definition of equity
Differences arising on the liabilities side of the balance sheet must
be eliminated immediately and charged to the income statement in
accordance with ifrs 3. There is no provision for breaking down
assets as under us gaap. The profit-sharing certificates without
voting rights of iha-GfK ag, Hergiswil, Switzerland are classified
as equity according to us gaap whereas according to ifrs they
are classified as liabilities. According to us gaap, therefore, the
acquisition of participation certificates by GfK ag triggered a capital
consolidation process which led to the valuation reduction of assets
and to the recognition of the aforementioned difference in the
income statement. However, under ifrs this is not a process which
triggers consolidation of capital.
Due to the differences mentioned, an adjustment of eur 1,565
thousand was carried out in tangible and other intangible assets
under ifrs as of December 31, 2004. The impact on income for
the 2004 period was eur 4,038 thousand. Minority interest in
consolidated total income was down by eur 361 thousand under
ifrs.
e) Goodwill
According to ias 21, goodwill and disclosed hidden reserves
must always be carried in the functional currency of the foreign
business operation. Under us gaap, these were carried in the
Group currency of the euro. Conversion at the exchange rate as
of the reporting date produces currency effects which have been
recognized directly in equity (December 31, 2004: eur – 3,187
thousand).
f) Pension provisions and provisions for partial retirement
Changes in pension obligations between us gaap and ifrs result
from the actuarial opinions available for these.
Under ifrs, provisions for amounts in excess of current remuneration as part of partial retirement are created in full at present
value as soon as the obligation exists. By contrast, under us gaap,
these amounts accrued at the same rates over the remaining period
of service from the date that the commitment arose.
This resulted in differences in the provisions between us gaap
and ifrs of amounting to eur 5,968 thousand as of December 31,
2004 (January 1, 2004: eur 5,455 thousand). Consolidated total
income for 2004 therefore fell by eur 1.555 thousand.
b) Date of first-time consolidation
The simplification rule applied under us gaap, according to
which the date of acquisition may be shifted forward to the end
of the prior reporting period subject to the fulfillment of certain
preconditions, does not exist under ifrs 3. An adjustment of
the goodwill in accordance with ifrs of eur 536 thousand was
therefore made on December 31, 2004. Consolidated total income
in 2004 fell by eur 584 thousand in comparison to us gaap.
c) Capitalization of development costs (panel set-up costs)
as internally generated intangible assets; additionally,
capitalization of overheads under ifrs
Under us gaap internally generated intangible assets may not
be capitalized, unless they involve software. Under ias 38,
development costs must be capitalized as an intangible asset where
it is technically possible and there is an intention to complete
and utilize the asset. Evidence must be produced to support a
probable, future utilization of the intangible asset and it must be
possible to reliably determine and attribute development costs.
Under ifrs, unlike us gaap, directly attributable overheads are
included in manufacturing costs. This means that under ifrs,
directly attributable overheads are additionally capitalized.
Owing to the additional capitalization, intangible assets as of
December 31, 2004 increased by eur 2,110 thousand (January 1,
2004: eur 900 thousand); consolidated total income for 2004
rose by eur 387 thousand under ifrs.
d) Deferred tax on intercompany result
Under us gaap, deferred tax on intercompany result from intraGroup disposals of assets must be calculated at the tax rate
applicable to the seller. By contrast, under ifrs deferred tax is
calculated at the tax rate applicable to the purchaser. This led to
a discrepancy in deferred tax liabilities between us gaap and ifrs
of eur 113 thousand as of December 31, 2004 (January 1, 2004:
eur 217 thousand).
g) Inflation-linked revaluation
The differing methods of recording effects from inflation-linked
valuation resulted in differences between us gaap and ifrs as of
December 31, 2004 in various balance sheet items, each of a
maximum amount of eur 154 thousand (January 1, 2004: eur 449
thousand). The impact on income for 2004 amounts to eur -333
thousand.
h) Reclassifications on the balance sheet
Under us gaap, provisions totaling eur 49,728 thousand (January 1,
2004: eur 41,669 thousand) were shown on the balance sheet as of
December 31, 2004 which, under ifrs, qualify as other liabilities.
Prepaid expenses shown under us gaap amounting to eur 7,406
thousand (January 1, 2004: eur 7,816 thousand) as of December 31,
2004 are included under other assets according to ifrs.
Under ifrs, advance payments made on tangible and other
intangible assets of eur 2,606 thousand (January 1, 2004:
eur 1,192 thousand) as of December 31, 2004 have been shown
as other current assets.
According to ifrs, the date of acquisition and therefore the date of
first-time consolidation is the point at which financial control is
gained over the acquired asset and business activity. The legal date
of transfer is irrelevant.
i) Reclassifications on the income statement
Under us gaap, additions and releases from valuation allowances
on all types of receivables in the income statement were shown
under selling and general administrative expenses. Under ifrs,
only those on trade receivables are recorded under this item; the
changes in valuation allowances on other receivables are shown
under other operating income or expenses (2004: respectively
eur 39 thousand and eur 572 thousand).
j) Recognition of deferred tax liabilities under ias 12
In 2004, eur 601 thousand (January 1, 2004: eur 533 thousand)
was reported as deferred tax liabilities for temporary differences
due to undistributed dividends from subsidiaries. Tax expenses for
2004 therefore rose by eur 68 thousand.
GfK_133
Supplementary disclosures
k) Actuarial gains/losses
Under us gaap, actuarial gains/losses from the valuation of pension
provisions were reported with impact on the result, where these
exceeded specific threshold values. By contrast, according to ias 19,
the option exists of recording these gains and losses directly in
income and expense recognized directly in equity. The impact on
income for 2004 totaled eur 236 thousand.
Reconciliation of the cash flow statement
us gaap Reconciliation
ifrs
2004
Cash flow from operating
activity
92,298
– 193
92,105
Cash flow from investing
activity
– 83,043
2,075
– 80,968
l) Purchase price allocation for company mergers
Cash flow from financing
activity
– 12,117
– 1,882
– 13,999
Under ifrs, the amount of intangible assets capitalized as part of
company mergers was eur 8,915 more than under us gaap. Owing
to a higher level of amortization, the ifrs consolidated total income
for 2004 was eur 3,397 thousand lower compared to us gaap.
Changes
in liquid funds
– 2,862
0
– 2,862
Other changes
in liquid funds
– 1,682
0
– 1,682
Liquid funds at the beginning
of the period
53,241
0
53,241
Liquid funds at the end
of the period
48,697
0
48,697
m) Stock options – expenses
Under us gaap, no expenses were recognized for employee options
based on apb 25. By contrast, under ifrs there is an obligation to
report expenses for employee options directly as expenses (2004:
eur 1,958 thousand) and to record them in the equity (December
31, 2004: eur 2,804 thousand; January 1, 2004: eur 846 thousand).
n) Provisions
Under ias 37, provisions must be created where the probability
of the event occurring is greater than the probability of it not
occurring (“more likely than not”; > 50 %). By contrast, under
us gaap the occurrence of the event had to be approximately 80 %
probable to warrant the creation of a provision. This resulted in
differences in the provisions amounting to eur 641 thousand as of
January 1, 2004. Consolidated total income for 2004 therefore rose
by eur 572 thousand.
All reconciliation elements in the balance sheet and income
statement are also reflected in the cash flow statement.
In addition, according to ifrs, the GfK Group reports interest
received under cash flow from investing activity and interest paid
under cash flow from financing activity. According to us gaap,
the balance of interest income/expenses with impact on payments
was reported under cash flow from financing activity.
In the cash flow statement under us gaap, changes in provisions
were treated collectively as an adjustment item to total consolidated income. In the cash flow statement under ifrs, this only applies
to long-term provisions whereas short-term provisions have been
included in the change in working capital.
34. Supplementary disclosures
According to ifrs, under certain circumstances negative minority
interest is not to be shown under minority interest but reported as
equity attributable to equity holders of the parent (December 31,
2004: eur 658 thousand; January 1, 2004: eur 1,051 thousand).
p) Change in the scope of consolidation
In 2004, two companies were deconsolidated retrospectively as
of January 1, 2004 under us gaap. They therefore do not come
under the scope of consolidation under ifrs from the start. This
resulted in differences amounting to eur 1,023 thousand in the
balance sheet. The impact on consolidated total income amounted
to eur 62 thousand.
q) Accumulated exchange differences
With the first-time adoption of ifrs, according to ifrs 1, there is the
option of not classifying accumulated conversion differences as a
separate element of equity (eur 2,984 thousand). The cumulative
exchange differences for all foreign operations are deemed to be
zero at the date of transition.
Auditors’ service fee
In 2005, eur 730 thousand was reported as expenses for the fee
for the auditors of GfK ag. The fee covers auditing the financial
statements of GfK ag according to the German Commercial Code
(hgb), the consolidated reporting package according to ifrs and
the consolidated financial statements according to ifrs. The fee
also includes the audit of the financial statements of German
subsidiaries according to hgb and their ifrs reporting packages.
eur 260 thousand were spent on tax advice from the auditor and
eur 1,440 thousand on other services by the auditor, particularly
relating to the acquisition of nop World.
Exemption of a subsidiary from the obligation to prepare
financial statements
Pursuant to Section 264b of the German Commercial Code (hgb),
GfK Marketing Services GmbH & Co. kg, Nuremberg, is exempt
from preparing, having audited and publishing financial statements
and a management report according to the provisions for joint
stock companies as per Section 264ff.
Number of staff
In the year under review, 6,806 staff (2004: 5,417) staff were
employed on average. The annual average number of staff was
determined on the basis of full-time employees. The average
was calculated using the key dates of March 31, June 30,
September 30 and December 31.
134_GfK
GfK_134
o) Negative minority interest
The allocation of staff to segments is shown in the following
table.
Total remuneration and shares of the Management Board
and Supervisory Board
2004
2005
Custom Research
1,862
2,834
1,612
1,813
Consumer Tracking
834
861
Media
330
397
HealthCare
238
352
Other
405
394
5,281
6,651
Managing directors/Management Board members
84
98
Trainees
52
57
5,417
6,806
Income for the year of major subsidiaries
Income for
the year
fessel-GfK Institut für Marktforschung Ges.m.b.H., Vienna, Austria
1,831
GfK arbor, llc, Media, usa
4,721
GfK Asia Pte Ltd., Singapore, Singapore
2,250
GfK Automotive, llc, Southfield, Michigan, usa
4,187
gfk custom research france sarl, Rueil-Malmaison, France
1,267
GfK Custom Research Inc., Minneapolis, usa
1,183
GfK emer Ad Hoc Research, s.l., Valencia, Spain
1,193
GfK Eurisko S.r.l., Milan, Italy
3,528
GfK Marketing Services GmbH & Co. kg, Nuremberg, Germany
10,740
GfK Marketing Services Japan k.k., Tokyo, Japan
1,154
GfK Marketing Services Ltd., West Byfleet/Surrey, uk
3,976
GfK nop Limited, London, uk
– 1,843
GfK nop, llc, New York, New York, usa
– 5,377
GfK Panelservices Benelux b.v., Dongen, Netherlands
1,535
GfK u.s. Healthcare Companies lp, East Hanover, New Jersey, usa
2,790
iha-GfK ag, Hergiswil, Switzerland
The Supervisory Board owns 6,689 shares. The members of the
Supervisory Board hold no options to shares.
There were no loans or advances to members of the Management
Board or Supervisory Board, and no contingent liabilities were
incurred for this group of persons.
199
g.f.k. marketing services france sas, Rueil-Malmaison, France
In total, the Management Board holds 389,287 shares and 717,424
options to shares.
Former members of the management of GfK GmbH, Nuremberg,
and of the Management Board of GfK ag received total remuneration
of eur 1,056 thousand (2004: eur 1,901 thousand). An amount
of eur 10,202 thousand (2004: eur 8,538 thousand) was set aside
by GfK ag for pension obligations to former members of the
Management Board and Managing Directors.
The following table lists the income for the year of major GfK
Group companies in accordance with the German Corporate
Governance Code.
Name and registered office of the company
The transfer to pension provisions for Management Board
members in office totaled eur 3,841 thousand for financial year
2005. The amount of the transfer is due, in part, to the switch
to the Dr. Klaus Heubeck mortality tables 2005g.
6,174
29,583
Intomart b.v., Hilversum, Netherlands
1,719
Mediamark Research Inc., New York, New York, usa
6,095
Full-time employees
The following information is supplemented by the tables under
the headings “Remuneration of the Management Board” and
“Remuneration of the Supervisory Board” on page 14f. of the
Corporate Governance section.
GfK_135
Supervisory Board
Hajo Riesenbeck
Kerstin Döpfert
Chairman
Independent Works Council representative at
GfK Aktiengesellschaft, Nuremberg
Business consultant
Director at McKinsey & Company, Düsseldorf
President of GfK-nürnberg Gesellschaft für Konsum-,
Markt- und Absatzforschung e.V., Berlin
Sandra Hofstetter (from May 24, 2005)
Senior Research Assistant at GfK Aktiengesellschaft,
Nuremberg
Dr. Arno Mahlert
Deputy Chairman
Member of the Management Board of
Tchibo Holding ag, Hamburg
Seats held on other Supervisory Boards and comparable
supervisory bodies:
Springer Science + Business Media s.a.,
Luxembourg (Chairman)
Saarbrücker Zeitung GmbH,
Saarbrücken (Deputy Chairman)
Beiersdorf ag, Hamburg
Stefan Pfander (from May 24, 2005)
Consultant at Wm. Wrigley Jr. Company, Chicago, usa
supervisory bodies:
International Chewing Gum Ass. (jcga), Brussels, Belgium
(Chairman)
Sweet Global Network e.V., Munich (Deputy Chairman)
Tchibo Holding ag, Hamburg
Barry Callebaut ag, Zurich, Switzerland
Werner Spinner
Business consultant
Management spokesman for Robert Klingel
GmbH & Co. kg, Pforzheim
supervisory bodies:
Scope Data Collection Manager at GfK Aktiengesellschaft,
Nuremberg
Member of the Board of Directors of the Institute for the Future,
Menlo Park, California, usa
supervisory bodies:
136_GfK
Cadbury Schweppes plc, London, uk
Lloyds tsb Bank plc, London, uk
Lloyds tsb Group plc, London, uk
Dalli GmbH, Stollberg (Chairman)
Grünenthal GmbH, Aachen (Chairman)
csm n.v., Diemen, Netherlands
Merz GmbH Holding, Frankfurt/Main
Jörg Bandt (until May 24, 2005)
Dieter Wilbois
Independent Works Council representative (Chairman) at
GfK Aktiengesellschaft, Nuremberg
Peter Zühlsdorff (until May 24, 2005 ordinary member)
Honorary Chairman of the Supervisory Board
Managing shareholder of dih Deutsche IndustrieHolding GmbH, Frankfurt/Main
GfK_136
Management Board
Declaration on the German Corporate Governance Code
The declaration prescribed by Section 161 of the German Stock
Corporation Act has been issued by the Management Board and
Supervisory Board and made permanently available to shareholders.
Responsible for Strategy, Internal Audit, Method and Product
Development, Public Affairs and Communications and it-Services
Seats held on Supervisory Boards and comparable
supervisory bodies:
bu Holding GmbH & Co. kg, Nuremberg (Deputy Chairman)
ergo Versicherungsgruppe ag, Düsseldorf
Neckermann Versand ag, Frankfurt/Main
Quelle ag, Fürth
Release for publication
The Management Board of GfK ag released the consolidated
financial statements for passing on to the Supervisory Board on
April 12, 2006. It is the duty of the Supervisory Board to check
the consolidated financial statements and to declare whether it
approves the consolidated financial statements.
Christian Weller von Ahlefeld (from June 1, 2005)
Chief Financial Officer
Responsible for Finances, Controlling, Accounting, Personnel
and Administration
supervisory bodies:
Brauns Heitmann GmbH & Co. kg, Warburg
Petra Heinlein
Responsible for Custom Research
Dr. Gérard Hermet
Petra Heinlein
Responsible for Retail and Technology
npd Intelect, l.l.c., New York, usa
supervisory bodies:
Dr. Gérard Hermet
Wilhelm R. Wessels
Responsible for Consumer Tracking, Media and HealthCare
Wilhelm R. Wessels
supervisory bodies:
Research Matters ag, Basel, Switzerland (Deputy Chairman)
GfK_137
Share in the capital
in %
Company name and registered office
Financial year
Equity
(eur’000)
Affiliated companies (Germany) included in the consolidated financial statements
(all details according to hgb commercial balance sheet i)
Beyen Marktforschung GmbH, Düsseldorf
100.003)
2005
– 1,884
encodex International GmbH, Nuremberg
95.00
2005
– 55
100.00
2005
614
100.003)
2005
3,351
enigma GfK Medien- und Marketingforschung GmbH, Wiesbaden
GfK cee Finance GmbH, Nuremberg
GfK macon GmbH, Waghäusel
GfK Marketing Services GmbH & Co. kg, Nuremberg
GfK Non-Food Tracking Holding GmbH, Nuremberg
100.00
2005
75
100.003)
2005
560
134,842
95.00
2005
100.00
2005
160,400
100.003), 7)
2005
210,652
GfK prisma Institut für Handels-, Stadt- und Regionalforschung
GmbH & Co. KG, Hamburg
GfK u.s. Equity GmbH, Nuremberg
100.00
100.00
2005
2005
405
11,512
GfK us Custom Research Holding GmbH, Nuremberg
100.00
2005
11,480
gpi Kommunikationsforschung Gesellschaft für PharmaInformationssysteme mbH, Nuremberg
media control GfK international GmbH, Baden-Baden
100.00
51.004)
2005
2005
56
2,258
GfK North America Holding GmbH, Nuremberg
GfK North America Investment GmbH, Nuremberg
Media Markt Analysen GmbH & Co. kg, Frankfurt/Main
100.00
2005
25
100.003)
2005
109
99.003)
2005
1,739
50.90
2005
95
Adware Media Solutions b.v., Hilversum, Netherlands
100.003)
2005
– 133
afi Holdings llc, Wilmington, Delaware, usa
100.003)
2005
45,587
afi Investments Limited, London, uk
100.003)
2005
38,191
asw Delaware llc, Wilmington, Delaware, usa
100.003)
2005
5,425
asw Investments, Inc., Wilmington, Delaware, usa
100.003)
2005
7,000
audimedia sarl, Issy les Moulineaux, France
100.003)
2005
1,331
Audimetrie n.v., Brussels, Belgium
100.003)
2005
1,146
Barterstore Limited, London, uk
100.003)
2005
40,476
Beyen Corp of Canada Inc., Niagara Falls, Canada
100.003)
2005
90
Beyen Corporation of America, Inc., Niagara Falls, usa
100.003)
2005
– 57
69.803)
2005
– 1,187
Collect Investigaciones de Mercado s.a., Providencia, Santiago, Chile
100.003)
2005
343
Dealtalk Limited, London, uk
100.003)
2005
3,882
E. Friedman Marketing Services, Inc., Harrison, New York, usa
100.003)
2005
8,972
Eiphos Holding ag, Hergiswil, Switzerland
100.003)
2005
5,569
63.003)
2005
– 67
94.80
2005
9,101
71.903)
2005
3,651
g.f.k. marketing services france sas, Rueil-Malmaison, France
100.003)
2005
5,012
GfK - Centar za istrazivanje trzista d.o.o., Zagreb, Croatia
100.003)
2005
396
Modata GmbH, Berlin
Adimark Investigaciones de Mercado Ltda., Providencia, Santiago, Chile
Adimark s.a., Providencia, Santiago, Chile
Caribou Lake Software, llc, Minneapolis, usa
Encodex Japan k.k., Osaka, Japan
fessel-GfK Institut für Marktforschung Ges.m.b.H., Vienna, Austria
Financière isl Société Anonyme, Issy les Moulineaux, France
1) Profit and loss transfer agreement
2) Details as per commercial balance sheet II
3) Fully indirect shareholding
138_GfK
4) Partially indirect shareholding
5) Details not available
6) Details as per provisional financial statements
drawn up under national law
7) Newly established in 2005
8) In liquidation
GfK_138
Affiliated companies (abroad) included in the consolidated financial statements
(all details according to ifrs commercial balance sheet ii)
in %
Financial year
60.003)
2005
320
100.003)
2005
7,242
GfK - memrb Marketing Services Limited, Nicosia, Cyprus
GfK (u.k.) Ltd., West Byfleet/Surrey, uk
GfK Animal Healthcare Limited, West Byfleet/Surrey, uk
GfK arbor, llc, Media, usa
Equity
(eur’000)
100.00
2005
9,345
100.003)
2005
53,729
89.503)
2005
5,495
GfK Automotive, llc (formerly Allison-Fisher International llc),
Southfield, Michigan, usa
GfK Belgrade d.o.o., Belgrade, Federal Republic of Yugoslavia
100.003)
100.003)
2005
2005
34,280
295
GfK Benelux Marketing Services b.v., Amstelveen, Netherlands
100.003)
2005
3,715
GfK bh d.o.o., Sarajevo, Bosnia-Herzegovina
100.003)
2005
11
GfK consumer and business information italy S.p.A., Milan, Italy
100.003)
2005
11,888
GfK Asia Pte Ltd., Singapore, Singapore
GFK custom research france sarl, Rueil-Malmaison, France
100.00
2005
6,690
100.003)
2005
5,393
GfK Danmark a/s, Frederiksberg, Denmark
87.00
2005
852
GFK emer ad hoc research, s.l., Valencia, Spain
50.10
2005
3,758
100.003). 7)
2005
120
GfK Eurisko S.r.l., Milan, Italy
100.003)
2005
– 14,388
GFK gral-iteo tržne raziskave d.o.o., Ljubljana, Slovenia
100.003)
2005
149
GfK Holding, Inc., Wilmington, usa
100.003)
2005
151,991
GfK Hungaria Piackutató Kft., Budapest, Hungary
100.003)
2005
1,312
GfK Immobilier Société a responsabilité limitée, Rueil-Malmaison, France
100.003)
2005
69
GfK Indicator Ltda. (formerly indicator gfk ltda.), São Paulo, Brazil
100.003)
2005
957
GfK Malta Holding Limited, Floriana, Malta
100.007)
2005
250,814
GfK Malta Services Limited, Floriana, Malta
100.003). 7)
2005
179,941
GfK market analysis e.p.e., Athens, Greece
99.504)
2005
176
GfK Market Research (Shanghai) Co. Ltd., Shanghai, China
100.003)
2005
502
GfK Marketing Services (Malaysia) Sdn. Bhd., Kuala Lumpur, Malaysia
100.003)
2005
421
GfK Marketing Services (Thailand) Limited, Bangkok, Thailand
100.003)
2005
0
GfK Marketing Services Australia Pty. Ltd., Sydney, Australia
100.003)
2005
1,228
GFK marketing services españa, sociedad anonima, Valencia, Spain
50.103)
2005
7,936
GfK Marketing Services Hong Kong Limited, Hong Kong, China
89.503)
2005
227
GfK Marketing Services Indonesia, pt, Jakarta, Indonesia
100.003)
2005
55
GfK Marketing Services Italia S.r.l., Milan, Italy
100.003)
2005
3,355
84.203)
2005
6,297
GfK Marketing Services Korea Limited, Seoul, Korea
100.003)
2005
– 619
GfK Marketing Services Ltd., Hong Kong, China
100.003)
2005
1,460
GfK Marketing Services Ltd., West Byfleet/Surrey, uk
100.003)
2005
7,443
GfK Marketing Services South Africa (Proprietary), Sandton, South Africa
100.003)
2005
– 58
GfK Martin Hamblin Inc., Hartford, Connecticut, usa
100.00
2005
479
GfK Martin Hamblin Limited, London, uk
100.00
2005
0
GfK Media Ltd., London, uk
100.00
2005
– 701
GfK Media Research Services GmbH, Vienna, Austria
100.003)
2005
984
GfK nop Field Interviewing Services Limited, London, uk
100.003)
2005
4,261
GfK nop Limited, London, uk
100.003)
2005
46,525
GfK nop Mystery Shopping Services Limited, London, uk
100.003)
2005
1,067
GfK nop Services Limited, London, uk
100.003)
2005
1,554
GfK nop Telephone Interviewing Services Limited, London, uk
100.003)
2005
5,384
GfK nop u.k. Holding Limited, London, uk
100.003)
2005
45,728
GfK nop, llc (formerly Roperasw llc), New York, New York, usa
100.003)
2005
– 30,138
100.00
2005
404
100.003)
2005
7,459
GfK Custom Research Inc., Minneapolis, usa
GfK Equity Research Inc., Boston, usa
GfK Marketing Services Japan k.k., Tokyo, Japan
GfK Norge a/s, Oslo, Norway
GfK Panelservices Benelux b.v., Dongen, Netherlands
8) In liquidation
GfK_139
GfK Panelservices Benelux Holding b.v., Dongen, Netherlands
Financial year
Equity
(eur’000)
100.00
2005
6,427
100.003)
2005
2,435
80.003)
2005
1,922
51.00
2005
843
GfK Romania-Institut de Cercetare de Piata Srl, Bucharest, Romania
100.003)
2005
340
GfK Slovakia Inštitút pre prieskum trhu s r.o., Bratislava, Republic of Slovakia
100.003)
2005
532
100.00
2005
1,395
GfK u.s. Healthcare Companies lp, East Hanover, New Jersey, usa
100.003)
2005
– 1,722
GfK us Holdings, Inc. (formerly GfK Americas, Inc., formerly nop World Inc.),
Wilmington, Delaware, usa
100.003)
2005
83,634
100.003)
2005
7,115
GfK-Bulgaria, Institut für Marktforschung EGmbH, Sofia, Bulgaria
100.003)
2005
243
GfK-Memrb Marketing Services fz-llc, Dubai, United Arab Emirates
100.003)
2005
495
GfK-Praha, spol s r.o., Prague, Czech Republic
100.003)
2005
1,830
GfK-rus Gesellschaft mbH, Moscow, Russia
100.003)
2005
1,244
GfK-Ukrainian Surveys & Market Research (usm), Kiev, Ukraine
100.003)
2005
1,505
93.013)
2005
786
100.003)
2005
1,180
ifr Italia S.r.L., Milan, Italy
93.013)
2005
642
ifr Marketing España s.a., Madrid, Spain
93.003)
2005
378
100.003)
2005
11,634
45,332
GfK Polonia Sp. z o.o., Warsaw, Poland
GfK portugal – Marketing Services, Limitada, Lisbon, Portugal
GfK Research Dynamics, Inc., Mississauga, Canada
GfK Sverige Aktiebolag, Lund, Sweden
ifr Europe Ltd., London, uk
ifr France s.a., Viroflay, France
iha Italia S.p.A., Milan, Italy
iha-GfK ag, Hergiswil, Switzerland
100.00
2005
incoma Research, s.r.o., Prague, Czech Republic
75.003)
2005
284
95.00
2005
1,469
100.003)
2005
240
95.003)
99.943)
2005
2005
84
2,814
indicorp participações s.a., São Paulo, Brazil
Informark Pty. Ltd., Braddon, Australia
Institut de Recherche d‘Informations statistiques (irdis) sarl,
Montigny le Bretonneux, France
Institut de Sondage Lavialle (isl) s.a., Issy les Moulineaux, France
Institut Français de Recherche-i.f.r. s.a., Viroflay, France
75.79
2005
11,928
Interactive Research Limited, London, uk
100.003)
2005
– 823
intercampus-recolha, tratamento e distribuição
de informação, Limitada, Lisbon, Portugal
Intomart b.v., Hilversum, Netherlands
50.103)
100.003)
2005
2005
576
6,244
Intomart GfK Belgium n.v., Brussels, Belgium
100.003)
2005
2,241
100.00
2005
2,897
100.003)
2005
3,025
Intomart GfK Group b.v., Hilversum, Netherlands
Liechti ag, Kriegstetten, Switzerland
m2a s.a., Saint Aubin, France
Mediamark Research Inc., New York, New York, usa
100.00
2005
103
100.003)
2005
33,544
701
51.003)
2005
100.003)
2005
717
54.553)
2005
– 687
Modata ag, Hergiswil, Switzerland
100.003)
2005
618
National Opinion Polls Limited, London, uk
100.003)
2005
3,527
nop automotive, inc., Farmington Hills, Michigan, usa
100.003)
2005
– 133
nop World Limited, London, uk
100.003)
2005
49,174
Numbers (Holdings) Limited, London, uk
100.003)
2005
333
Numbers Data Processing Limited, London, uk
100.003)
2005
323
Numbers Market Research Limited, London, uk
100.003)
2005
523
Orange Interactive Research ab, Stockholm, Sweden
100.003)
2005
480
Oz Toys Marketing Services Pty. Ltd., Sydney, Australia
51.003)
2005
– 381
Procon GfK Arastirma Hizmetleri a.s., Istanbul, Turkey
100.00
2005
1,975
metris-métodos de recolha e investigação social, lda, Lisbon, Portugal
mil Research Group Limited, London, uk
mmo Media-Market-Observer GmbH & Co kg, Vienna, Austria
140_GfK
8) In liquidation
GfK_140
in %
in %
Financial year
Risposta Srl, Milan, Italy
100.003)
2005
179
Roper Starch Worldwide, llc, Harrison, New York, usa
100.003)
2005
– 14
Roperasw Europe Limited, Leatherhead/Surrey, uk
100.003)
2005
4,759
Significant GfK bvba, Heverlee, Belgium
100.003)
2005
1,651
Strategic Marketing Asia, Ltd., Bala Cynwyd, Pennsylvania, usa
100.003)
2005
–704
99.603)
2005
27
100.003)
2005
2,005
100.003)
2005
58
100.00
2005
28
100.007)
2005
25
Strateji GfK Research Services A.S., Istanbul, Turkey
Telecontrol ag, Hergiswil, Switzerland
Equity
(eur’000)
Affiliated companies (Germany), not included in the consolidated financial statements
(all details according to hgb commercial balance sheet i)
dm-plus Direktmarketing GmbH, Nuremberg
GfK Data Services GmbH, Nuremberg
GfK Dritte Vermögensverwaltung GmbH, Nuremberg
GfK Fernsehforschung GmbH, Nuremberg
100.00
2005
28
100.003)
2005
28
GfK Marktforschung GmbH, Nuremberg
100.00
2005
28
GfK Panel Services Deutschland GmbH, Nuremberg
100.00
2005
28
GfK prisma Verwaltungs-GmbH, Hamburg
100.00
2005
34
Media Markt Analysen Verwaltungs-GmbH, Frankfurt/Main
100.00
2005
28
mil Handels- und Investitions GmbH, Cologne
100.003)
2005
383
nop Automotive GmbH, Cologne
100.003)
2005
34
Adfinders b.v., Hoofddorp, Netherlands
100.003)
2005
– 6546)
bdi Research Limited, London, uk
100.003)
2005
5)
bem Limited, London, uk
100.003)
2005
5)
bwv Holding ag, St. Gallen, Switzerland
100.003)
2005
– 2576)
caticall- recolha de informação assistida por computador, lda., Lisbon, Portugal
100.003)
2005
6
dragon eye Ltd., Hergiswil, Switzerland
100.003)
2005
– 1,0776)
Eurisko nopWorld rom s.r.l., Iasi, Romania
100.003)
2005
1
GeoAdimark S.A., Providencia, Santiago, Chile
100.003)
2005
119
GfK Marketing Services Verwaltungs-GmbH, Nuremberg
GfK - european opinion research centre eeig, Brussels, Belgium
GfK Custom Research worldwide gie, Brussels, Belgium
GfK Custom Research Latam Holding, s.l., Valencia, Spain
GfK Great Britain Ltd., London, uk
2005
3
2005
06)
95.00
2005
5)
3)
2005
5)
7)
2005
17
100.00
2005
5)
3)
2005
5)
3)
2005
– 2796)
3)
2005
5)
3)
2005
– 2066)
3)
2005
13
99.003)
2005
4376)
100.003)
2005
6252)
3)
2005
– 1426)
3)
2005
5)
75.00
2005
– 216)
3)
95.00
2005
8)
100.003)
100.003)
2005
2005
966)
446)
100.00
GfK HealthCare Asia Pte Ltd., Singapore, Singapore
gfk holding mexico, s.a. de c.v., Mexico City, Mexico
GfK Kasachstan too, Almaty, Kazakhstan
100.00
100.00
gfk latinoamerica holding, s.l., Valencia, Spain
GfK Market Consulting (Beijing) Co. Ltd., Beijing, China
GfK Marketing Service Chile Limitada, Santiago, Chile
GfK Marketing Services Eastern Europe Holding spol. z o. o., Warsaw, Poland
GfK marketing services ltda., São Paulo, Brazil
GfK Marknadsundersökning Sverige ab, Lund, Sweden
GfK memrb Marketing Services Maroc, Casablanca, Morocco
GfK nop Field Marketing Services Limited, London, uk
GfK npd Marketing Services Worldwide b.v., Amstelveen, Netherlands
GfK Panel Arastirma Hizmetleri a.s., Istanbul, Turkey
GfK Stratégie et développement Groupement d‘intérêt Economique,
Rueil-Malmaison, France
ifr Field sarl, Viroflay, France
85.00
81.004)
51.00
90.00
99.00
100.00
100.00
100.00
8) In liquidation
GfK_141
Affiliated companies (abroad), not included in the consolidated financial statements
in %
Financial year
Equity
(eur’000)
ifr Nederland b.v., Amsterdam, Netherlands
100.003)
2005
586)
ifr Polska Sp. z o.o., Warsaw, Poland
100.003)
2005
206)
93.013)
2005
06)
Inform Business Development Pty. Ltd., Sydney, Australia
100.003)
2005
0
International Research Associates, Inc., Harrison, New York, usa
100.003)
2005
5)
Intomart DataCall b.v., Hilversum, Netherlands
100.003)
2005
– 2856)
Media Control ag, Zurich, Switzerland
100.003)
2005
26
Media Control Marketing Research España, s.l., Madrid, Spain
100.003)
2005
– 1176)
– 79
ifr u.k. Ltd., London, uk
Mediametrics Limited, London, uk
100.003)
2005
nop Consumer Market Research Limited, London, uk
100.003)
2005
0
nop Market Research Limited, London, uk
100.003)
2005
204
nop Mystery Shopping Limited, London, uk
100.003)
2005
0
nop Surveymaster Limited, London, uk
100.003)
2005
0
nopw Limited, London, uk
100.003)
2005
1
Procon GfK Ltd., Baku, Azerbaijan
100.003)
2005
8)
ps - Martin Hamblin Limited, London, uk
100.003)
2005
5)
Radio Research Limited, London, uk
100.003)
2005
0
Server s.a., Providencia, Santiago, Chile
100.003)
2005
–8
50.00
2005
817
20.003)
2005
5)
Associated companies (Germany) (all details according to hgb commercial balance sheet I)
Ernst und GfK Grundstücksgesellschaft, Nuremberg
Infotab Research GmbH, Munich
agb Nielsen, medijske raziskave, d.o.o., Ljubljana, Slovenia
21.003)
2005
523
Brand Index vof, Hilversum, Netherlands
33.303)
2005
5)
Common Technology Centre eeig, London, uk
25.003)
2005
5)
Europanel Raw Database gie, Brussels, Belgium
50.004)
2005
5)
GfK-Media Research Middle East ag, Hergiswil, Switzerland
49.003)
2005
352)
ggc-nop Limited, London, uk
25.003)
2005
5)
50.00
2005
5)
3)
2005
602)
3)
2005
5)
50.00
2005
2,8682)
3)
2005
522)
3)
2005
5)
3)
2005
5)
Research Matters ag, Basel, Switzerland
33.00
2005
1,147
Sports Tracking Europe b.v., Amstelveen, Netherlands
25.00
2005
412)
3)
2005
4702)
3)
2005
5)
3)
2005
5)
3)
2005
5)
3)
50.00
2005
5)
49.003)
2005
– 33
5.804)
2005
5)
i + g Infratest Medical Research Inc., Rhode Island, usa
incoma Consult s.r.o., Prague, Czech Republic
19.50
Jan Schipper Compagnie b.v., Bussum, Netherlands
MarketingScan snc, Rueil-Malmaison, France
Media Focus (arge), Hergiswil, Switzerland
20.00
50.00
npd Intelect, l.l.c., Port Washington, New York, usa
org-GfK Marketing Services (India) Private Limited, Mumbai, India
St. Mamet Saisie Informatique (smsi) sarl, St Mamet la Salvetat, France
Starch Research Services Limited, Toronto, Ontario, Canada
ufo Veld b.v., Amsterdam, Netherlands
25.00
40.00
20.00
20.00
50.00
Unified Fieldwork Organisation ufo v.o.f., Amsterdam, Netherlands
v.o.f. Projectbureau Politiemonitor, Hilversum, Netherlands
50.00
Other participations (abroad)
Bureau voor Reclame Statistiek Hoofddorp b.v., Hoofddorp, Netherlands
iri Infoscan Ltd., Maidenhead/Berkshire, uk
142_GfK
8) In liquidation
GfK_142
Associated companies (abroad)
Auditors’ report
We conducted our audit of the consolidated financial statements in
accordance with § 317 hgb [Handelsgesetzbuch, German Commercial
Code] and German generally accepted standards for the audit of
financial statements promulgated by the Institut der Wirtschaftsprüfer (idw). Those standards require that we plan and perform the
audit such that misstatements materially affecting the presentation
of the net assets, financial position and results of operations in the
consolidated financial statements in accordance with the applicable
financial reporting framework and in the Group management report
are detected with reasonable assurance. Knowledge of the business
activities and the economic and legal environment of the Group and
expectations as to possible misstatements are taken into account
in the determination of audit procedures. The effectiveness of
the accounting-related internal control system and the evidence
supporting the disclosures in the consolidated financial statements
and the Group management report are examined primarily on a test
basis within the framework of the audit. The audit includes assessing
the annual financial statements of those entities included in
consolidation, the determination of entities to be included in
consolidation, the accounting and consolidation principles used
and significant estimates made by management, as well as
evaluating the overall presentation of the consolidated financial
statements and Group management report. We believe that our
audit provides a reasonable basis for our opinion.
Our audit has not led to any reservations.
In our opinion, based on the findings of our audit, the consolidated
financial statements comply with ifrs, as adopted by the eu, the
additional requirements of German commercial law pursuant to
§ 315a section 1 hgb and supplementary provisions of the articles of
incorporation and give a true and fair view of the net assets, financial
position and results of operations of the Group in accordance with
these requirements. The Group management report is consistent
with the consolidated financial statements and as a whole provides
a suitable view of the Group’s position and suitably presents the
opportunities and risks of future development.
Nuremberg, 13 April 2006
kpmg Deutsche Treuhand-Gesellschaft
Aktiengesellschaft
Wirtschaftsprüfungsgesellschaft
Kozikowski
(German Public Auditor)
Renner
(German Public Auditor)
We have audited the consolidated financial statements prepared
by the GfK Aktiengesellschaft, Nuremberg, comprising the balance
sheet, the income statement, statement of changes in equity,
cash flow statement and the notes to the consolidated financial
statements, together with the Group management report for the
business year from 1 January 2005 to 31 December 2005. The
preparation of the consolidated financial statements and the
Group management report in accordance with ifrs, as adopted
by the eu, and the additional requirements of German commercial
law pursuant to § 315a section 1 hgb [Handelsgesetzbuch, German
Commercial Code] and supplementary provisions of the articles
of incorporation are the responsibility of the parent company’s
management. Our responsibility is to express an opinion on the
consolidated financial statements and on the Group management
report based on our audit.
GfK_143
144_GfK
GfK_144
Overview of years
146
Glossary of financial terminology
150
Glossary of specialist GfK terms
152
Index
V
VI
Financial calendar
VII
Acknowledgements
VII
GfK_145
ADDITIONAL INFOTRMATION
List of GfK company abbreviations used in the management report
Overview of years1)
Financial reporting for 2002 to 2004 as per us gaap and for 2004 and 2005 as per ifrs
us gaap
ifrs
Key figures –
income statement
Key figures –
income statement
eur million/percent
Sales
Change in % on prior year
Personnel expenses
Depreciation/amortization2)
Operating income
ebitda
ebitda margin in %
3)
ebit
Margin in %
Income from participations3)
ebit after income from participations
Margin in %
Result from ongoing
business activity
Consolidated total income before
minority interests
Tax ratio in %
2002
2003
2004
2004
2005
559.4
595.3
671.7
669.1
937.3
+ 10.6
+ 6.4
+ 12.8
–
+ 40.1
244.1
256.6
280.7
282.7
373.1
+ 9.4
+ 5.1
+ 9.4
–
+ 32.0
24.9
24.8
22.0
25.8
44.6
– 11.7
– 0.4
– 11.3
–
+ 72.5
47.2
67.3
86.1
82.9
125.1
+ 36.4
+ 42.4
+ 27.9
–
+ 50.9
68.5
91.2
108.9
107.8
153.5
+ 18.2
+ 33.0
+ 19.5
–
+ 42.4
12.2
15.3
16.2
16.1
16.4
43.6
66.4
86.9
77.6
80.7
+ 46.6
+ 52.1
+ 30.9
–
+ 3.9
7.8
11.1
12.9
11.6
8.6
6.4
3.1
4.3
4.4
28.3
+ 119.6
– 51.3
+ 37.5
–
+ 550.2
50.0
69.5
91.1
82.0
109.0
+ 53.1
+ 38.9
+ 31.2
–
+ 32.9
8.9
11.7
13.6
12.2
11.6
45.3
66.3
90.5
81.4
92.2
+ 165.9
+ 46.4
+ 36.6
–
13.3
30.0
41.1
63.5
53.1
67.5
+ 449.6
+ 36.9
+ 54.7
–
27.1
33.7
38.0
34.3
34.7
26.8
1) Prior to 2002, financial reporting was in accordance with the German Commercial Code (hgb). This year’s table therefore only includes 4 years.
2) In tangible and intangible assets
3) Including income from associates and other income from participations
146_GfK
eur million/percent
Sales
Personnel expenses
Depreciation/amortization2)
ebitda3)
ebitda margin in %3)
Operating income
Margin in %
Income from participations3)
ebit
Margin in %
Income from ongoing
business activity
Tax ratio in %
Overview of years1)
us gaap
ifrs
Key indicators – balance sheet
Key indicators – balance sheet
eur million/percent
20021)
2003
2004
2004
2005
Fixed assets
263.8
285.0
334.2
347.6
1,104.3
+ 26.5
+ 8.0
+ 17.3
–
+ 217.7
189.8
200.9
210.7
215.6
391.5
Asset structure in %
Investments
Current assets
– 0.1
+ 5.9
+ 4.9
–
+ 81.6
139.0
141.9
158.6
161.2
282.1
Asset structure in %
Investments
76.6
47.7
85.1
84.6
681.9
– 29.3
– 37.7
+ 78.4
–
+ 705.8
thereof in tangible assets2)
28.6
20.9
22.8
22.4
35.4
thereof in tangible assets2)
– 8.1
– 27.0
+ 8.9
–
+ 58.2
thereof in financial assets
48.0
26.8
62.3
62.2
646.5
thereof in financial assets
– 37.8
– 44.2
+ 132.7
–
+ 938.5
181.5
204.1
248.4
256.7
426.6
+ 11.3
+ 12.5
+ 21.7
–
+ 66.1
281.2
288.2
297.9
306.5
1,069.2
Shareholders’ equity
Borrowings
Total assets
Net indebtedness
+ 15.6
+ 2.5
+ 3.4
–
+ 248.9
469.6
502.0
560.3
563.2
1,495.8
+ 13.7
6.9
+ 11.6
–
+ 165.6
– 39.6
– 24.9
– 31.7
– 39.3
– 523.0
– 67.3
– 37.2
+ 27.3
–
+ 1,231.5
Equity3)
Borrowings
Total assets
Net indebtedness
us gaap
ifrs
Key indicators – funds statement
eur million/percent
Cash flow from ongoing
business activity
Cash flow from investment activity
Cash flow from financing activity
Free cash flow
Key indicators – cash flow statement
2002
2003
2004
2004
2005
eur million/percent
Cash flow from
operating activity
69.3
69.2
92.3
92.1
128.9
– 8.8
– 0.1
+ 33.3
–
+ 40.0
– 73.2
– 42.7
– 83.0
– 81.0
– 651.8
Cash flow from investing activity
– 29.8
– 41.7
+ 94.3
–
+ 705.0
2.9
– 16.2
– 12.1
– 14.0
550.3
– 82.6
– 652.3
– 25.3
–
+ 4,030.7
40.7
48.3
69.5
69.7
93.5
– 9.2
+ 18.5
+ 44.0
–
+ 34.1
Cash flow from financing activity
Free cash flow
Overview of years
2) In tangible and intangible assets
3) Including equity attributable to minority interests
GfK_147
ADDITIONAL INFORMATION
Current assets
eur million/percent
Non-current assets
Overview of years1)
us gaap
ifrs
2002
2003
2004
2004
2005
5.1
3.5
3.4
3.3
3.8
11.3
14.3
17.2
15.4
10.6
Profit to sales ratio in %
5.4
6.9
9.5
7.9
7.2
Profit to sales ratio in %
Ratio of net indebtedness to
cash flow, in years
1.0
0.5
0.5
0.6
5.6
Ratio of net indebtedness to
cash flow, in years
20.2
19.5
17.9
17.7
17.2
Key indicators – profitability
Capex as a
percentage of sales
Return on capital employed in %
Pay-out ratio in %
Key indicators – profitability
Capex as a
percentage of sales
Return on capital employed in %
Pay-out ratio in %
us gaap
ifrs
Key indicators –
company valuation
Earnings per share in eur
2)
Free cash flow per share in eur2)
2002
2003
2004
2004
2005
0.82
1.06
1.68
1.35
1.77
+ 310.0
+ 29.3
+ 57.8
–
+ 31.1
1.30
1.54
2.22
2.22
2.79
Key indicators –
company valuation
Earnings per share in eur2)
Free cash flow per share in eur2)
–
+ 18.5
+ 44.0
–
+ 25.7
21.8
12.2
12.7
15.3
122.6
ebit in %
90.8
37.5
36.5
47.9
480.1
ebitda in %
57.8
27.3
29.1
36.4
340.6
ebitda in %
Free cash flow in %
97.2
51.5
45.6
56.3
559.2
Free cash flow in %
Dividend per share in eur
0.17
0.21
0.30
0.30
0.33
Dividend per share in eur
5.2
6.5
9.4
9.4
11.6
Total dividend
+ 18.2
+ 25.0
+ 44.8
–
+ 23.4
1.56
1.10
1.05
1.05
1.17
10.68
19.02
28.65
28.65
28.30
Gearing in %
Net indebtedness in relation to
Total dividend
Dividend yield in %
Year-end share price in eur2)
Gearing in %
Net indebtedness in relation to
ebit in %
Dividend yield in %
Year-end share price in eur2)
Weighted number of shares (in thousand)
31,346
31,346
31,367
31,367
33,486
Weighted number of shares (in thousand)
Number of shares as of Dec 31
31,346
31,346
31,475
31,475
35,048
Number of shares as of Dec 31
2) Adjusted for capital increase
148_GfK
Overview of years1)
us gaap
Sales by division
and region
ifrs
2002
2003
2004
2004
Sales by division
and region
2005
eur million/percent
Division
eur million/percent
2)
Custom Research
Consumer Tracking
Media
HealthCare
Division
224.5
220.8
252.1
+ 14.8
– 1.6
+ 14.2
137.3
166.7
187.0
+ 12.4
+ 21.4
+ 12.2
86.0
89.8
94.4
+ 1.4
+ 4.4
+ 5.2
61.3
58.3
62.2
– 2.1
– 4.9
+ 6.8
35.8
49.3
68.1
n.a.
+ 37.7
+ 38.2
249.4
416.4
+ 67.0
187.0
209.6
+ 12.1
94.4
100.3
+ 6.3
62.2
96.2
+ 54.5
68.1
107.3
+ 57.6
Region2)
Germany
Northern Europe
America
Number of employees at year-end
2)
Custom Research
Consumer Tracking
Media
HealthCare
Region2)
204.7
221.7
236.3
+ 6.4
+ 8.3
+ 6.6
196.7
204.7
215.7
+ 14.4
+ 4.1
+ 5.4
59.1
54.1
55.6
+ 13.8
– 8.4
+ 2.7
28.5
31.8
40.1
+ 21.1
+ 11.6
+ 26.0
40.4
48.6
84.8
+ 9.7
+ 20.4
+74.5
30.1
34.3
39.3
+ 3.1
+ 14.1
+ 14.3
4,879
5,066
5,539
+ 4.9
+ 3.8
+ 9.3
236.3
253.6
+ 7.3
215.7
257.5
+ 19.4
55.6
127.2
+ 128.8
40.2
52.7
+ 31.2
82.0
207.0
+ 152.4
39.3
39.4
5,539
7,515
+ 0.3
+ 35.7
Germany
Northern Europe
America
Number of employees at year-end
GfK_149
Overview of years
2) Figures from the Management Information System
A
Adjusted operating income (ifrs)
Adjusted operating income does not take into
account highlighted items. The management
uses this financial indicator in the Group-wide
management of GfK’s operating business.
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.
Assets (ifrs)
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 the future.
Asset structure (us gaap)
The asset structure describes the relationship
between non-current assets and current assets.
It is determined by multiplying the ratio of fixed
assets to current assets by 100.
Associated companies
Minority participations in companies on whose
business or company policy a decisive, but not
controlling influence is exercised. Associated
companies are in principle valued at equity.
B
Borrowings
Total assets less equity.
C
Cash flow
Balance of funds inflow and outflow affecting
payment.
Consolidated total income (ifrs)
Consolidated total income attributable to the
equity holders plus consolidated total income
attributable to minority interests; also referred
to as consolidated total income before minority
interests.
Consolidated total income (us gaap)
Consolidated total income attributable to
equity holders of the parent; also referred to
as consolidated total income after minority
interests.
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.
Cost of sales accounting
Form of income statement which shows the income
achieved in the market during the accounting
period. Opposite: total cost accounting. Here the
total operating income for the period is shown,
whereby the sales and changes in inventories
are shown against the total cost. Both forms of
accounting produce the same income for the
accounting period.
Current assets (ifrs)
The total of all short-term receivables, deferrals,
funds, securities and inventories reported on the
assets side of the balance sheet.
Current assets (us gaap)
Assets intended for short-term use in business
operations.
Current liabilities (ifrs)
The total of all short-term provisions, liabilities
and deferrals reported on the liabilities side of the
balance sheet.
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.
Dividend yield
Dividend per share in relation to the annual
closing price.
E
ebit (ifrs)
Abbreviation for earnings before interest and
taxes calculated as operating income plus
income from associates plus other income
from participations.
ebit (us gaap)
Abbreviation for earnings before interest and
taxes calculated as operating income plus
other income less other expenses.
ebitda
Earnings before interest, taxes, depreciation and
amortization, calculated as ebit plus depreciation
and amortization charges.
Equity (ifrs)
Equity comprises funds from the equity holders
available to the company as capital contributions
and/or deposits and retained profits as well as
equity attributable to minority interests.
150_GfK
Equity (us gaap)
Equity comprises funds from the equity holders
available to the company as capital contributions
and/or deposits and retained profits.
Equity ratio
Balance sheet equity in relation to total assets.
The higher the indicator, the lower the level of
indebtedness.
F
Fixed assets (us gaap)
Assets intended for ongoing use in business
operations. Fixed assets comprise intangible
assets, tangible assets and financial assets.
Financial expenses (ifrs)
Financial expenses that do not result directly from
participating interests. These are calculated as
interest expenses plus other financial expenses.
Financial income (ifrs)
Financial income that does not result directly from
participating interests. This is calculated as interest
income plus other financial income.
Free cash flow
Cash flow from ongoing business activity less
capex.
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 re-valued equity on a pro rata basis.
Sales less cost of sales.
H
Highlighted items
The costs that are not taken into account in
adjusted operating income: integration costs,
amortization on disclosed hidden reserves as
part of purchase price allocation, share-based
payments and long-term incentives, other income
and expenses including, in particular, currency
effects from the valuation on the reporting date.
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.
Income (ifrs)
adjusted operating income.
ebit plus other financial income less other
financial expenses.
Income from participations
Contains the items income from participations,
profits and losses on the disposal of participations
and depreciation on participations.
M
Majority participations
Affiliated companies.
Margin
A margin represents the relationship of an
indicator (income, ebit, ebitda etc.) to sales.
Minority participations
Generic term for associated companies and
other participations. The participation quota
is below 50 %.
N
Net indebtedness (ifrs)
Liquid funds and securities less pension liabilities
and financial liabilities.
Net indebtedness (us gaap)
Financial resources and securities held as current
assets less pension liabilities and financial liabilities.
Non-current liabilities (ifrs)
Total of all long-term provisions, liabilities,
deferred tax liabilities and other deferrals
reported on the liabilities side of the balance
sheet.
Operating income (ifrs)
Gross income from sales less selling and general
administrative expenses plus other operating
income less other operating expenses.
Operating income (us gaap)
Gross income from sales less selling and
general administrative expenses.
Operating profit (us gaap)
Sales of the divisions and regions less operating
costs according to the Management Information
System. The most important internal income
indicator under us gaap.
Income from affiliated companies not included
in the scope of consolidation and other participations as well as expenses and income from
disposals or write-downs of book values of investments plus gains/losses from the disposal
of participations.
Expenses in connection with ongoing business
activity, excluding financial expenses, not
attributable to cost of sales or selling and
general administrative expenses. Examples are
impairments losses from the disposal of fixed
assets and exchange losses.
R
Ratio of net indebtedness to cash flow
Net indebtedness in relation to free cash flow.
Return on equity
Consolidated total income in relation to average
shareholders’ equity.
T
Tax ratio (ifrs)
Tax on income from ongoing business activity in
relation to income from ongoing business activity.
Tax ratio (us gaap)
Taxes on income and earnings in relation to result
from ongoing business activity.
Total return on equity (ifrs)
ebit in relation to average total assets.
Total return on equity (us gaap)
ebit after income from participations in
relation to average total assets.
U
us gaap
Abbreviation for United States Generally
Accepted Accounting Principles.
Income from ongoing business activity, excluding
financial income, which does not represent sales.
Examples are profits on the disposal of fixed
assets and exchange gains.
Companies in which a participation is held but on
whose business policy no decisive influence is
exercised. The participation quota is below 20%.
P
Pay-out ratio
Total dividend in relation to consolidated total
income.
Profit to sales ratio (ifrs)
Consolidated total income in relation to sales.
Profit to sales ratio (us gaap)
Consolidated total income before minority
interests in relation to sales.
Glossaries
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.
O
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 (ifrs)
Assets that benefit business operations in the
long term. In addition to intangible assets,
tangible assets and investments, these include
deferred tax assets and other non-current
receivables and deferrals.
GfK_151
I
A
Ad Hoc Research
Custom Research.
agf – Television Research Partnership
The body for which GfK Fernsehforschung carries
out continuous television audience research
in Germany. Founded in 1988, the agf now
comprises the tv networks ard, ProSiebensat.1
Media ag, rtl and zdf: tv panel.
Automotive research
Qualitative and quantitative analysis of vehicle
markets as a basis for the successful development
and launch of vehicles and accessories.
B
Brand Simulator
A model based on consumer panel data, used
to optimize the marketing mix.
Business-to-business research
Surveys which focus on companies as the
target group. The respondents are company
representatives who are in a position to
provide information on the basis of their
post within the relevant company.
C
Challenges of Europe
Annual GfK study, as part of which respondents
in 15 European countries are asked about what
they think are the most important issues that
need addressing in their country.
Concept test, concept research
Tool used to assess acceptance of a new product,
brand or advertising campaign based on a verbal
description or picture, carried out before a
product test.
Conjoint analysis
multivariate analysis method to determine
complex patterns of consumer preferences.
Consumers, Challenges
Challenges of Europe.
Consumers, European
European Consumer Study.
Consumer climate
Indicator that is calculated on the basis of the
findings of a monthly consumer survey carried
out on behalf of the European commission. It
gives insight into the level and general trends
of private consumption overall.
152_GfK
Consumers in Europe
A GfK survey carried out in two waves in 2005
on consumer values, preferences and lifestyle
in 17 European countries. The survey was based
on the international lifestyle segmentation
Euro-Socio-Styles, Lifestyle research.
Euro-Socio-Styles
A lifestyle typology developed by GfK Methodenforschung (method research). Lifestyle research,
consumer typology
Consumer panel
A sample of households which provide regular
information on their purchases. ConsumerScan, ConsumerScope, panel
HealthCare
HealthCare is one of GfK’s business divisions,
which supplies information services on product
development, communications, image and nba
for medication: pharma market research.
ConsumerScan
Consumer panel in which the purchasing
behavior of households and individuals is
recorded. Covers purchases of nearly all fast
moving consumer goods. Panel, household panel.
ConsumerScope
Mail panel, carrying out continuous surveys
of purchases of consumer goods with slowermoving acquisition cycles and the use of
services. Panel, consumer panel.
Consumer Tracking
A survey of households and individual consumers
that is repeated at regular intervals; Consumer
Tracking is one of GfK’s business divisions.
Household panel panel tracking.
Consumer typology
Identification of a group of people based on
psychological and other individual characteristics
that encompass more than socio-demographic
factors. Euro-Socio-Styles, lifestyle research,
social groups.
Customer segmentation
Market segmentation.
Custom Research
Custom Research is one of GfK’s business
divisions (formerly: Ad Hoc Research). Ad Hoc
Research.
E
Europanel
Continuous consumer research cooperation which
has been in place since the 1960s and involves
24 European countries. GfK works in partnership
with British market researchers, tns. Panel,
consumer panel.
European Consumer Study
GfK study which provides information on a range
of private consumer trends in nine European
Union countries. The survey is representative
of around 300 million private consumers aged
14 and over.
H
Household panel
A representative sample of households which
regularly report on their purchases. ConsumerScan, Consumer Tracking, panel.
L
Lifestyle research
Surveys which encompass more than individual
markets by aiming to divide the population
into categories based on typical behavior. The
categories describe behavioral types. EuroSocio-Styles.
M
Mailpanel
A postal survey of units of the same sample which
is repeated at regular intervals. ConsumerScope
Marketing mix
Specific combination of marketing tools and
individual campaign parameters derived from
product, distribution, contractual and communications policy. Brand Simulator.
Market segmentation
Division of an overall market into sub-markets
using different categories. Segmentation can be
by product type, price classes, geographic split
or psychological and socio-economic lifestyle
features and value categories of consumers.
Lifestyle research.
Media
Media is one of GfK’s business divisions, which
provides information services on reach, intensity
and type of use of media and media offering and
their acceptance: tv panel, media research,
print media research, reach research.
MediaWatch
An electronic metering device incorporated into
a wristwatch, used to measure usage of various
media. Radiocontrol, reach research,
media research, portable people meter,
Media.
Modeling
Modeling is used to illustrate complex reality in a
simplified form, taking into account key elements
and correlations. The resultant model is used to
analyze, simulate and forecast different scenarios.
Multi client study
A study that is commissioned by several
purchasers jointly.
Multivariate analysis
Method which is used to analyze the interaction
of a minimum of three features (variables) at
the same time. Key multivariate methods include
multiple correlation and regression analysis,
multidimensional scaling, factor analysis and
conjoint analysis.
O
Out-of-home consumption
Out-of-home consumption comprises all food
and drink consumed outside the home, e.g. in
restaurants, diners, pubs and bars and from kiosks.
The term out-of-home consumption also covers
ready meals and other fully prepared meals that
are taken home for consumption.
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.
ConsumerScan, ConsumerScope, household
panel, tracking.
Pharma market research
Specialist segment of market research for
pharmaceutical and healthcare companies,
covering human and veterinary medicine and
dentistry. HealthCare.
Portable people meter
Metering devices which are used in reach
research and worn at all times. Typical portable
people meters are Radiocontrol, Media Watch,
media research, Media.
PriceChallenger
International price simulation model which is used
to quantify consumer response to changes in prices.
Price test, price research
Tests used in establishing the optimum price.
PriceChallenger.
Print media research
Systematic, empirical research which focuses on
various print media. It is used, in particular, as a
basis for media planning by media companies and
their advertising clients. Media.
Product test, product research
Instrument used to check acceptance of new
products and advertising campaigns based on a
verbal description or picture. Concept test.
Purchasing power
GfK calculates purchasing power in terms of all
net income per region. The calculation is based on
official income tax statistics. Agricultural income
(farmers), income support and pensions are added
to this. Income such as that of entrepreneurs from
partnerships, which is not relevant to consumption,
is deducted. The result is then projected for the
current year and re-calculated for different regional
levels.
R
Radiocontrol
Electronic meter, incorporated into a wristwatch,
that measures radio listening. Reach, reach
research, media research, portable people
meter.
Radio research
Measuring the listening habits of radio listeners.
Portable people meter, Radiocontrol,
Media.
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. Reach research, tv panel,
Radiocontrol, portable people meter, print
media research.
Reach research
The continuous recording of media usage; part of
media research. Reach, portable people
meter, Radiocontrol, Media.
GfK business division which provides retail
information about consumer technology markets.
Formerly Non-Food Tracking. retail tracking,
retail panel.
Retail panel, retail research
Regular recording of sales, product categories
and products via a representative sample of
retailers with different retail types and sales
channels. retail tracking, Retail and
Technology, tracking.
Retail tracking, retail research
Continuous, systematic monitoring of sales in
the markets of consumer technology goods and
services. These product movements are recorded
in all relevant sales channels and distribution
forms in the retail trade. retail panel, Retail
and Technology, tracking.
Roper Reports
us consumer study which provides information
about consumer behavior, lifestyle, values and
attitude based on 20,000 interviews a year. The
Roper Reports Worldwide cover consumer trends
in more than 30 countries.
S
Sample
The observation data and/or survey units which
are selected from all of the units and included in a
specific survey.
Segmentation
Market segmentation.
Social groups
The social group typology is based on differentiating
groups according to cultural or social features.
Depending on the approach, the people may also
be grouped by financial status, life stage and
other social criteria.
startrack
A host-free it platform for the production and
analysis of data from the GfK Retail and
Technology division.
GfK_153
Glossaries
Media research
Systematic, empirical research used as a basis
for media planning by media companies and their
advertising clients. tv audience research, Media, print media research, portable people
meter, reach, reach research.
Path analysis
Path analysis examines the assumed cause and
effect correlations of different features on the
basis of data that has been collected by statistical
methods.
Media planning
Media planning involves decisions about what
advertising media to use in marketing communication by selecting the media that best
match the intended marketing aims and creating
the optimum mix based on the use of different
techniques. The aim of all media planning is
to find the ideal solution for one or more communication aims. Media research.
T
Telecontrol xl
The latest generation of tv meters produced
by GfK subsidiary, Telecontrol. tv audience
research, tv panel, tv meter.
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. Consumer Tracking, retail tracking.
tv audience research
TV audience research is used to determine
audience share. Media planning, media
research reach.
tv meter
An electronic instrument that measures a
person’s tv viewing at regular intervals;
in Germany and Austria this is done on a
second-by-second basis. tv panel,
Media, Telecontrol xl.
tv panel
A representative group of households whose
tv viewing is continuously metered by GfK
Fernsehforschung and used as the basis for
audience share and ratings figures. Panel,
reach, tv meter.
tv reach
The percentage of the total population or a
specific target group that is reached by tv.
Media, reach, reach research.
154_GfK
Mission Statement
Client-driven
to their success.
key to our success.
asw Delaware, llc
Change
937.3
+ 40.1
ebitda
in eur m
107.8
153.5
+ 42.4
in eur m
82.9
125.1
+ 50.9
in %
12,4
13.3
–
2)
Margin3)
Operating income
in eur m
77.6
80.7
+ 3.9
in eur m
81.4
92.2
+ 13.3
Tax ratio
Earnings per share
in %
669.1
Growth
2005
in eur m
2004
Sales
GfK Asia, Singapore
GfK Asia Pte Ltd.
Innovation
Dividend per share
4)
in eur m
53.1
67.5
+ 27.1
in %
34.7
26.8
–
in eur m
92.1
128.9
+ 40.0
in eur
1.35
1.77
+ 31.1
in eur
0.30
0.33
+ 10.0
Total dividend
in eur m
9.4
11.6
+ 23.4
full-time
5,539
7,515
+ 35.7
valuation.
GfK Arbor, usa
GfK arbor, llc
GfK ag, Germany
GfK Sverige, Sweden
iha Italia S.p.A
GfK Automotive llc
public.
Our people
Adimark, Chile
Merc, Mexico
GfK Media, uk
GfK Media Ltd.
GfK cri, usa
GfK cbi, Italy
GfK nop, usa
GfK Eurisko, Italy
Slovenia
Nuremberg, Germany
56f., 79, 82, 149 America
73, 147 Assets
69, 73, 99, 147 Borrowings
see also
HealthCare, Media,
69 Capital increase
Cash flow
nop World
Core companies:
Consolidated
Dealtalk Ltd., uk
Consolidation
GfK nop, llc, usa
127 Contingencies
71, 146 ebit
nop World Ltd., uk
IV, 71, 146 ebitda
Nuremberg, Germany
GfK-Rus, Russia
Income
117f. Leases
IV Margin
87, 93 Marketing
74, 77, 89, 94, 149 Media
see income
Mediamark Research
& Processing
Ad Hoc Research
see Custom Research
GfK v2
78, 85, 91, 109f.
nop World Inc.)
GfK Automotive, usa
GfK Automotive, llc
5 Star Initiative
renumeration
see Strategy
GfK us Holding, usa
Index
73, 99, 120, 147 Equity
73 – Equity ratio
Research Matters ag
74 Gearing
28ff., 32f., 79., 149 Germany
106, 116 Goodwill
74, 77, 89, 94, 149 HealthCare
1, 8, 69f., 75, 79, 85, nop World
93, 110
Operating income
see Income
148 Pay-out ratio
83 Purchasing
24ff., 78f. Regions
Return
see Margin
88ff. Risk report
IV, 71, 93f., 98,112, Sales
146
19ff., 69
IV, 21, 105, 115, 148
21, 148
19ff.
Shares
– Key indicators
74 Soft facts
Staff
see Employees
8, 70, 84 Strategy
86, 93 Sub-holdings
Tax
146
112f., 146
III
IV
V
VI
Mission Statement
Client-driven
to their success.
key to our success.
asw Delaware, llc
Change
937.3
+ 40.1
ebitda
in eur m
107.8
153.5
+ 42.4
in eur m
82.9
125.1
+ 50.9
in %
12,4
13.3
–
2)
Margin3)
Operating income
in eur m
77.6
80.7
+ 3.9
in eur m
81.4
92.2
+ 13.3
Tax ratio
Earnings per share
in %
669.1
Growth
2005
in eur m
2004
Sales
GfK Asia, Singapore
GfK Asia Pte Ltd.
Innovation
Dividend per share
4)
in eur m
53.1
67.5
+ 27.1
in %
34.7
26.8
–
in eur m
92.1
128.9
+ 40.0
in eur
1.35
1.77
+ 31.1
in eur
0.30
0.33
+ 10.0
Total dividend
in eur m
9.4
11.6
+ 23.4
full-time
5,539
7,515
+ 35.7
valuation.
GfK Arbor, usa
GfK arbor, llc
GfK ag, Germany
GfK Sverige, Sweden
iha Italia S.p.A
GfK Automotive llc
public.
Our people
Adimark, Chile
Merc, Mexico
GfK Media, uk
GfK Media Ltd.
GfK cri, usa
GfK cbi, Italy
GfK nop, usa
GfK Eurisko, Italy
Slovenia
Nuremberg, Germany
56f., 79, 82, 149 America
73, 147 Assets
69, 73, 99, 147 Borrowings
see also
HealthCare, Media,
69 Capital increase
Cash flow
nop World
Core companies:
Consolidated
Dealtalk Ltd., uk
Consolidation
GfK nop, llc, usa
127 Contingencies
71, 146 ebit
nop World Ltd., uk
IV, 71, 146 ebitda
Nuremberg, Germany
GfK-Rus, Russia
Income
117f. Leases
IV Margin
87, 93 Marketing
74, 77, 89, 94, 149 Media
see income
Mediamark Research
& Processing
Ad Hoc Research
see Custom Research
GfK v2
78, 85, 91, 109f.
nop World Inc.)
GfK Automotive, usa
GfK Automotive, llc
5 Star Initiative
renumeration
see Strategy
GfK us Holding, usa
Index
73, 99, 120, 147 Equity
73 – Equity ratio
Research Matters ag
74 Gearing
28ff., 32f., 79., 149 Germany
106, 116 Goodwill
74, 77, 89, 94, 149 HealthCare
1, 8, 69f., 75, 79, 85, nop World
93, 110
Operating income
see Income
148 Pay-out ratio
83 Purchasing
24ff., 78f. Regions
Return
see Margin
88ff. Risk report
IV, 71, 93f., 98,112, Sales
146
19ff., 69
IV, 21, 105, 115, 148
21, 148
19ff.
Shares
– Key indicators
74 Soft facts
Staff
see Employees
8, 70, 84 Strategy
86, 93 Sub-holdings
Tax
146
112f., 146
III
IV
V
VI
Contents
May 2, 2006
February 28, 2007
May 2, 2006
April 4, 2007
May 15, 2006
April 4, 2007
June 29, 2006
May 15, 2007
August 14, 2006
May 23, 2007
November 14, 2006
August 14, 2007
2 2005 at a glance
November 14, 2007
19 GfK shares
26 GfK Special:
28 Germany:
Acknowledgements
Publisher
GfK ag
Nordwestring 101
D-90319 Nuremberg
http://www.gfk.com
Tel. +49 (0) 911- 395-2645
Fax +49 (0) 911- 395-4041
Investor Relations
Bernhard Wolf
Tel. +49 (0) 911- 395-2012
Fax +49 (0) 911- 395-4075
Design
Frankfurt/Main
Photography
Lithography
Translation
Printing
40 Northern Europe:
52 America:
150 Glossaries
VI Index
VII
II
Contents
May 2, 2006
February 28, 2007
May 2, 2006
April 4, 2007
May 15, 2006
April 4, 2007
June 29, 2006
May 15, 2007
August 14, 2006
May 23, 2007
November 14, 2006
August 14, 2007
2 2005 at a glance
November 14, 2007
19 GfK shares
26 GfK Special:
28 Germany:
Acknowledgements
Publisher
GfK ag
Nordwestring 101
D-90319 Nuremberg
http://www.gfk.com
Tel. +49 (0) 911- 395-2645
Fax +49 (0) 911- 395-4041
Investor Relations
Bernhard Wolf
Tel. +49 (0) 911- 395-2012
Fax +49 (0) 911- 395-4075
Design
Frankfurt/Main
Photography
Lithography
Translation
Printing
40 Northern Europe:
52 America:
150 Glossaries
VI Index
VII
II

Understanding the consumer – the key to sustained market

Transcription

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