GfK. Growth from Knowledge

Transcription

CONTENTS
P R O V I S I O N A L K E Y D AT E S I N T H E F I N A N C I A L C A L E N D A R
15 April 2004
Accounts press conference, Nuremberg
15 April 2004
Analysts’ conference, Frankfurt/Main
19 May 2004
Quarterly report as at 31 March1)
15 June 2004
Annual General Meeting, Nuremberg
19 August 2004
Interim report as at 30 June1)
18 November 2004
Quarterly report as at 30 September1)
24 February 2005
Provisional result for financial year 20041)
31 March 2005
10 To our shareholders and business associates
31 March 2005
18 Corporate Governance
13 May 2005
26 Investor Relations
24 May 2005
12 August 2005
15 November 2005
Quarterly report as at 30 September 1)
TURNING MARKET OPPORTUNITIES
INTO SUCCESS
III Our Corporate Values
IV GfK Group – mission statement – our aims –
our strategies
1 Good financial year:
Opportunities converted into market success
GfK Group in figures
2 Overview of the five business divisions
4 2003 at a glance
6 The Supervisory Board
7 Report by the Supervisory Board
14 The Management Board
21 GfK shares
28 GfK special
30 Sector: brands, advertising and
market research
C O N TA CT S
Public Affairs and Communications
Dr. Ulrike Schöneberg
Tel. +49 (0) 911 - 395 26 45
Fax +49 (0) 911 - 395 40 41
public.affairs@gfk.de
Investor Relations
Bernhard Wolf
Tel. +49 (0) 911 - 395 20 12
Fax +49 (0) 911 - 395 40 75
bernhard.wolf@gfk.de
Publisher:
GfK ag
Nordwestring 101
90319 Nuremberg
http://www.gfk.de
VII
Editorial support services:
Medienservice Peter Reichard, Ebersberg
Design:
Scheufele Kommunikationsagentur GmbH,
Frankfurt/Main
Photography:
Annette Hornischer, Frankfurt
M I S S I O N S TAT E M E N T
Lithography:
Mainteam, Aschaffenburg
Companies need to make decisions. Knowledge is the basis for decision-making.
Translation:
Our business information services provide the essential knowledge that industry, retail,
AGET Limited, London, UK
the service sector and the media need in order to make their decisions.
Printing:
Mediahaus Biering GmbH, Munich
The English language version is a translation
of the audited German Annual Report.
Printed on unchlorinated bleached paper
36 Consumer Tracking
GfK Group: Annual Report 2003
1) Publication is scheduled for before the start of the
trading session.
If you wish to order further copies
of the Annual Report or have any
queries, please contact:
G f K G RO U P: G ROW T H F RO M K N OW L E D G E
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 public.
44 Non-Food Tracking
52 Media
60 Ad Hoc Research
68 HealthCare
76 Innovative marketing research
MANAGEMENT REPORT AND FINANCIAL
S TAT E M E N T S F O R T H E G f K G R O U P
84 Management report
111 Financial statements
116 Notes to the consolidated financial statements
Annual Report 2003 GfK. Growth from Knowledge
148
Auditors’ report
Turning market opportunities into success
A D D I T I O N A L I N F O R M AT I O N
150 Glossaries and short-form names
156/V Five-year overview
VI Index
VII Financial calendar
VII Contacts
II
O U R C O R P O R AT E VA L U E S
GfK GROUP
116 Accounting and valuation
methods
GfK GROUP: FIVE-YEAR-OVERVIEW
Client-driven
Our clients’ needs drive our business. We continuously seek to
better understand our clients’ needs, improve all aspects of
existing research products, offer innovative products and to be an
integral part of our clients’ information systems. Accuracy, sound
methodology, excellent client service, flexibility, timely delivery
and cost effectiveness all ensure that we meet and even exceed
our clients’ expectations. We build long-term partnerships with
our clients, contributing to their success.
Established 70 years ago as Germany’s first market research company, with more than 120 subsidiaries,
Accounting as per hgb
5,066 people at the end of financial year 2003, over 70 per cent of whom are based outside Germany.
We provide clients from industry, retail, the service sector and the media with information services,
which they use for their marketing to existing and potential clients as well as to distinguish themselves
from the competition. As a company with a long tradition, we are careful to maintain in our work the
continuity that comes with decades of success in the business. At the same time, we use innovation and
progress to drive our activities.
98, 106, 110 Acquisitions
Accounting as per us gaap
3, 67, 92, 109, 137 Ad Hoc Research
offices and participations in over 50 countries on five continents, the GfK Group is one of the leading
market research organizations. Ranked No. 1 in Germany and No. 5 in the world, the Group employed
INDEX
1999
2000
2001
In eur m
Key indicators – funds statement
Cash flow from ongoing
business activity
Cash flow from
investment activity
Cash flow from
financing activity
Free cash flow
23.4
– 40.4
86.1
6.9
24.8
– 31.1
76.0
– 104.2
– 4.7
16.8
5.7
44.8
2001
2002
2003
Change
120, 128, 142 et seq. Affiliated companies
Pro
in
forma1)
%
In eur m
Key indicators – funds statement
– 0.1
business activity
–
–
–
–
69.3
–73.2
2.9
69.2
– 42.7
– 16.2
40.7
48.3
– 41.7
– 652.3
+ 18.5
121, 145 Associated companies
88, 113, 125 Balance sheet
125 et seq. – Notes to the balance sheet
88, 113 – Total assets
Cash flow from
investment activity
89, 156 Borrowings
2 et seq., 90 et seq. Business divisions
101, 109, 137
Cash flow from
financing activity
see also
Free cash flow
Ad Hoc Research
Income
88, 112, 154 – Income from ongoing
business activity
87, 122 – Income from
participations
87, 112, 121 et seq. – Income statement
121 et seq. – Notes to the income
statement
87, 112 – Operating income
26 et seq. Investor Relations
89, 90, 108, 156 Investment
89, 114, 156 Liquidity
10 et seq., 14 et seq., Management Board
19, 139, 141
1, 87, 156 Margin
3, 59, 92, 109, 137 Media
Net income for the year
see Consolidated total
income
Consumer Tracking
Our people
Key indicators – profitability
Key indicators – profitability
HealthCare
People are our main asset. Development through training,
sharing ideas and sound experience is essential to our business.
Our people have the freedom to explore and develop their
talents and are empowered to achieve our common goals. We
encourage and reward initiative, dedication and hard work.
Fairness, good communication and working relationships at all
levels and locations are key to our success.
Capex as a percentage
of sales
Capex as a percentage
of sales
Media
Companies need to make decisions.
Knowledge is the basis for decision-making
Our business information services provide the essential knowledge that industry, retail, the
service sector and the media need in order to make their decisions.
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
public.
Innovation
We recognize that investing in continuous innovation in both
the process and the end product is a prerequisite to meeting
clients’ requirements. Our aim is to be at the cutting edge with
our key business activities. Clients’ needs, evolving markets, new
technology and the expertise and ideas of our people throughout
the world are what drive innovation.
Outperform sector sales growth
We respect and learn from local business practices and cultures
and provide knowledge tailored to local needs. Our global network
comprises international teams, tools and products to provide
multinational clients with consistent services. As proud members
of the GfK Group, we share local and international expertise to
continually improve all aspects of our business.
6.5
–
5.1
3.5
–
8.6
19.6
– 4.3
–
17.4
21.3
–
Return on equity in %
Return on capital employed in %
8.2
14.5
5.7
–
11.3
14.3
–
Return on capital employed in %
Profit to sales ratio in %
2.5
5.4
– 1.3
–
5.4
6.9
–
Profit to sales ratio in %
Ratio of net indebtedness to
cash flow, in years
Pay-out ratio %
–
–
39.1
17.0
0.5
–
1.0
0.5
–
–
20.2
19.5
– 47.0
–
Key indicators –
company valuation
0.37
0.88
– 0.18
Cash flow per share in eur
0.29
0.22
1.71
Pay-out ratio %
–
–
–
14.5
–
150.2
0.24
0.98
1.28
+ 30.6
Earnings per share in eur
–
1.56
1.85
+ 18.6
Cash flow per share in eur
–
–
21.8
12.2
90.8
37.5
–
Gearing in %
–
Net indebtedness in relation to:
ebit in %5)
–
–
44.9
–
57.8
27.3
–
ebitda in %
Free cash flow in %
–
–
52.8
–
97.2
51.5
–
Free cash flow in %
Dividend per share in eur
0.13
0.15
0.17
–
0.20
0.25
+ 25.0
Dividend per share in eur
Total dividend
3.4
3.9
4.4
–
5.2
6.5
+ 25.0
Total dividend
Achieve attractive margins
Dividend yield in %
Lead the way through innovation
Year-end share price in eur
Focus on customer loyalty
Average number of shares
(in thousand)
Number of employees
at year-end
111 et seq. Consolidated financial
statements:
1, 88, 111, 156 – Consolidated total income
1, 88, 111, 156 – Consolidated total income
before minority interests
Ratio of net indebtedness to
cash flow, in years
ebitda in %
Cash flow
89, 114, V – from ongoing business
activity
89, 114, V – Free cash flow
Consolidation
116 – Methods of consolidation
120 et seq. – Scope of consolidation
Key indicators –
company valuation
Net indebtedness in relation to:
ebit in %5)
Global expertise – local knowledge
4.1
Return on equity in %
Gearing in %
OUR AIMS
4.3
Non-Food Tracking
0.33
40.0
23,622
3,676
0.48
31.0
26,122
0.83
–
1.56
1.10
20.39
–
12.81
22.82
26,122
4,212
4,396
–
4,653
26,122
26,122
4,879
5,066
–
+ 78.1
0.0
+ 3.8
2, 43, 90 et seq., Consumer Tracking
109, 137
136 Contingencies
102 et seq., 108 Corporate Communications
7, 12, 18 et seq., 141 Corporate Governance
88, 113, 156 Current assets
116 Currency conversion
113, 118, 123 Deferred taxes
Earnings per share
see Shares
ebit
1, 87, 112, 156 – before income from
participations
1, 87, 112, 156 – after income from
participations
Dividend yield in %
Year-end share price in eur
Average number of shares
(in thousand)
1, 87, 112, 156 ebitda
Number of employees
at year-end
ebit margin
see Margin
99 et seq., 108, 139, V Employees
102 Environmental protection
2) The figures for total performance (hgb) and sales (us gaap) for the business divisions are based on figures from the Management Information System.
O U R S T R AT E G I E S
We intend to achieve our aims through:
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.
They may differ from the figures reported in the income statement.
89, 105 Financing
3) On tangible assets and intangible assets
88, 113, 126 et seq., Fixed assets
156
4) ebit after income from participations in relation to total performance until 2000 and to sales from 2001
5) Before income from participations
89, 114, 119, 135 Funds statement
1, 89, V Gearing
Expansion in selected markets
Excellence in added value services and consultancy
Leverage of our unique expertise in consumer, healthcare, media and retail markets
Long-term investment in advanced technologies and Internet applications
121 Net interest income
1, 2, 51, 91, 109, 137 Non-Food Tracking
90 et seq., 98 et seq. Operating profit
1, 90 et seq., Organic growth
95 et seq., 107
101 et seq., 108 Organization and
administration
87, 121 Other operating expenses
87, 121 Other operating income
V, 24 Pay-out ratio
138 Pro forma statements (sfas 1)
135 Proposed appropriation of
profits
89, 113, 119, Provisions
133 et seq.
102, 108 Purchasing
1, V Ratio of net indebtedness
to cash flow
94 et seq., 137 Regions
Return, see Margin
1, 12, 24, 132, V Dividend
1) The pro forma statements for 2001 are for the purpose of comparability of the figures for 2001 with those for subsequent years.
Growth
1, 89, 161, V Net indebtedness
117, 125 Goodwill
1, 3, 75, 93, 101, 109, HealthCare
137
1, V Return on capital employed
98, 108 Research and development
103 et seq., 109 Risk report
1, 87, 112, 117, 156 Sales
137 Segment reporting,
see also Business divisions,
Regions
21 et seq.
1, 88, V
23
21 et seq.
Shares
– Earnings per share
– Key indicators
– Share price performance
Shareholders’ equity
88, 113, 115, 118, – Change in shareholders’
154, 130 et seq., 156
equity
88, 156 – Equity ratio
V – RoE
24 Shareholder structure
142 et seq. Shareholdings
90, 108 Soft facts
Staff
see Employees
19, 25, 117, 131 Stock options
III, 10 et seq., 109 Strategy
6 et seq., 19, Supervisory Board
139 et seq.
88, 123 et seq. Taxes on income and
earnings
III
IV
V
VI
Financial year 2003
THE GfK GROUP
GOOD FINANCIAL YEAR 2003
Sales up more than 6 per cent to over eur 595 million
ebit after income from participations climbs almost 39 per cent to
eur 69.5 million
Margin increase from almost 9 per cent to 11.7 per cent confirms position as
one of the top five market research companies in the world
HealthCare division established – delivering services in 12 European countries
and the usa via 13 subsidiaries
Non-Food Tracking division restructured in Europe, Asia and North America
and preparations under way for launch in South America
GfK Group in figures1)
Change
2002
2003
in %
Sales
in eur million
559.4
595.3
+ 6.4
ebitda
in eur million
68.5
91.2
+ 33.0
ebit before income from
participations
in eur million
43.6
66.4
+ 52.1
ebit after income from
participations
in eur million
50.0
69.5
+ 38.9
in %
8.9
11.7
–
in eur million
30.0
41.1
+ 36.9
in %
33.7
38.0
–
in eur million
25.7
33.3
+ 29.8
Earnings per share
in eur
0.98
1.28
+ 30.6
Dividend per share
in eur
0.20
0.253)
+ 25.0
business activity
in eur million
69.3
69.2
– 0.1
Investment
in eur million
76.6
47.7
– 37.7
Return on equity
in %
14.9
17.3
–
Return on capital employed
in %
11.3
14.3
–
Sales return
in eur million
5.4
6.9
–
Net indebtedness
in eur million
– 39.6
– 24.9
– 37.2
–
Margin2)
Consolidated total income
Tax ratio
Ratio of net indebtedness
to cash flow
in years
1.0
0.5
Equity ratio
in %
38.7
40.7
–
Gearing
in %
21.8
12.2
–
full-time
4,879
5,066
+ 3.8
No. of employees at year-end
1) GfK Group accounting in accordance with us gaap
2) ebit after income from participations in relation to sales
3) Proposal to the Annual General Meeting on 15 June 2004
1
OVERVIEW OF THE FIVE BUSINESS DIVISIONS
We provide our clients with information and advisory services on
the attitudes, preferences and behaviour of consumers and users
with regard to products, media and services. With our five business
divisions we offer services for a large number of consumer goods
markets, the pharma sector and media and service industries, some
in Europe and others throughout the world.
CONSUMER TRACKING
Through the Consumer Tracking division, we provide our clients
with regular information services based on continuous surveys
and analyses of consumer purchase decisions and behaviour in
22 countries in Europe. These cover consumer goods and services
of all kinds.
F O C U S O F A C T I V I T I E S 2003
Harmonization of data collection and analysis in Europe
Development of measuring technology to record purchasing
data of consumers via the Internet
Improved client online access to GfK database
2003 in figures
Sales
Operating profit
Margin1)
eur 89.8 million
+ 4.4 %
eur 3.5 million
+ 44.8 %
3.9 %
+ 1.1 %2)
829
– 3.9 %
No. of employees
NON-FOOD TRACKING
In Non-Food Tracking, we provide clients in industry and retail with
information services derived from continuous retail sales analyses
and surveys on consumer technology products in 48 countries around
the world.
Acquisition of majority in the retail research business of media
control GfK International, Germany
Expansion of retail data collection activities for the entertainment
segment
Preparations under way for launch of activities in South America
2003 in figures
Sales
Operating profit
Margin1)
eur 166.7 million
+ 47.3 %
21.6 %
+ 3.8 %2)
1,517
+ 8.8 %
No. of employees
1) Operating profit in relation to sales
2) Change in percentage points
2
+ 21.4 %
eur 36.1 million
Business divisions – overview
THE GfK GROUP
MEDIA
Through our Media division, we provide clients in 22 countries
throughout Europe with information services on the reach, intensity
and nature of media usage and media acceptance. The offering
covers both the classic media such as television, radio, print and
outdoor advertising as well as Internet and the new online and
offline media.
Establishment of TV panel in the Ukraine
Start of metering of audience ratings for digital TV programmes
in Germany
Metering of radio ratings in Switzerland and the UK as well as
on a test basis in Germany and France
2003 in figures
Sales
Operating profit
Margin1)
eur 58.3 million
– 4.9 %
eur 7.5 million
+ 23.6 %
12.8 %
+ 2.9 %2)
328
– 4.9 %
No. of employees
AD HOC RESEARCH
Through our Ad Hoc Research division, we provide clients in
28 countries around the world and via partnerships in another
63 countries with information services for their operational and
strategic marketing decisions. These include tests and surveys on
product and pricing policy, brand management, communication,
distribution and customer loyalty.
2003 in figures
Restructuring of business operations in Italy
Establishment of key account management system
Successful business development in Germany, the uk and Central
and Eastern Europe
Sales
Operating profit
Margin1)
eur 220.8 million
– 1.6 %
eur 15.4 million
+ 20.4 %
7.0 %
+ 1.3 %2)
1,706
+ 3.5 %
No. of employees
H E A LT H C A R E
Through the subsidiaries in our HealthCare division in 13 countries,
we provide clients with information services relating to product
development, communication, image and price control of medicines.
We also provide analyses of market positioning and customer
satisfaction in the healthcare sector as well as the volume of
materials and products used in the dental and veterinary sectors.
Acquisition of majority in us company v2 GfK
Establishment of HealthCare division with international focus
Immediate start on strategic direction for the division and
integration of subsidiaries
2003 in figures
Sales
Operating profit
Margin1)
eur 49.3 million
+ 37.6 %
eur 6.3 million
+ 25.6 %
12.7 %
– 1.2 %2)
228
+ 36.5 %
No. of employees
2) Change in percentage points
3
2 0 0 3 AT A G L A N C E
01
02
03
04
05
06
Our
Corporate
Values
tv research contract
Official start of the
Due to the resegmen-
Cooperation agreement
Start of a series of
GfK Marketing Services
in Austria extended in
implementation of the
tation of Deutsche
between the British
worldwide workshops
Australia acquires
advance: fessel-GfK
newly designed GfK
Börse, GfK shares are
Photo Imaging Council
to implement the new
Inform Business
will continue to measure
logo. Corresponding
now listed on the s-dax
and GfK Marketing
GfK Corporate Values.
Development, a
tv ratings on behalf of
revision of publications,
rather than the m-dax.
Services uk on the
Austrian tv and radio
website, presentation
broadcasters orf until
materials and docu-
2006. Contract volume:
ments.
eur 11.5 million.
Establishment of GfK
Media Ltd., a media
research company, in
for the British photographic market.
First issue of the GfK
Impuls investor newsletter to be published
quarterly.
company specializing
in information services
for it and interactive
games. The company is
part of the Non-Food
the uk. The aim is to
Indicator GfK, São
A survey carried out
carve out a niche in
Paulo, organizes
by GfK rus shows
the uk, a key European
international client
GfK Ad Hoc Research
that France, Germany
media market.
conference attended
Worldwide, Brussels,
by around 200 clients
organizes the 2nd
from Argentina, Brazil
Research Summit in
and Chile.
La Chapelle en Serval,
and Japan have an
above-average image
among the majority of
Russians.
GfK participation –
stand and specialist
presentations – at the
Advertising Research
Foundation’s annual
conference, one of the
two biggest industry
events of the year.
4
exchange of retail data
Tracking division.
attended by over 100
GfK clients from
Ad Hoc Research.
2003 at a glance
THE GfK GROUP
07
08
09
10
11
12
GfK acquires the
With specialist
GfK launches pre-
Over 300 photographic
Deutschland, which is
majority stake in v2
presentations and an
Vietnam receives
parations for its
experts from all over
part of the Non-Food
(now v2 GfK), Blue Bell,
exhibition stand, GfK
the German quality
Non-Food Tracking
the world attended
Tracking division,
Philadelphia, an
takes part in the annual
authority tüv Rhein-
activities in South
the Imaging Summit
acquires a majority
American company
conference of European
land’s iso-9001
America.
organized by GfK
stake in the Retail
specializing in pharma
market research
certification.
Research division of
market research, and
association esomar
media control GfK
gains access to the
in Prague, which is
International based in
most important pharma
attended by over
Baden-Baden. This divi-
market worldwide.
1,000 experts from
sion specializes in retail
research for books,
Establishment of the
60 countries worldwide.
Australian Prime
Marketing Services
Deutschland to discuss
GfK sponsors the
Minister John Howard
international statistics
presents GfK subsidiary
symposium for German
Informark with the
and international
“Prime Minister’s
Donation of eur 25,000
statisticians. Organizers
Employer of the Year
to a home for children
trends in the dynamic
photo industry.
HealthCare division,
The GfK paper, “A new
of the event are
Award” for its services
and young people in
where 13 GfK com-
generation of brand
Erlangen-Nuremberg
relating to the employ-
Nuremberg. The
“Innovation: top or flop
panies, the new majority
controlling” is awarded
University and the Insti-
ment of people with
amount represented
– consumers decide”
acquisition v2 GfK
the best methodological
tut für Arbeitsmarkt-
disabilities.
proceeds from the sale
was the theme of
included, supply in-
paper at the esomar
und Berufsforschung
the 53rd GfK Annual
formation services for
conference 2003,
(labour market and
Conference, where
the pharmaceutical,
making GfK the first
occupational research
around 600 marketing
human and veterinary
prize-winner to submit
institute), Nuremberg.
experts came together
medicine sectors.
the best paper two
videos, cds and film.
to discuss the success
factors involved in
innovation strategies.
Extension of radio
years in a row.
A survey carried out
in conjunction with
the Wall Street Journal
Europe on trust in
GfK sponsors the
managers in finance,
Nuremberg “City Run”
politics and society
research contract in
In Manager Magazine’s
for the second time,
shows that politicians
Switzerland, which
yearly ranking of annual
in which 8,000 runners
and managers have a
means that iha GfK will
reports, GfK achieves
of all ages and abilities,
very poor image and
record Swiss radio
third place in the s-dax
including 130 GfK
inspire little trust in
ratings on behalf of srg
category and is there-
employees, take part.
almost all European
ssr idée suisse until
fore among the top 20
2008. Sales volume:
best annual reports of
eur 8.3 million.
2003.
of around 14,000
Christmas cards and
approx. 6,000 tins of
Lebkuchen, both of
which featured designs
painted by children of
the home.
countries.
5
THE SUPERVISORY BOARD
Peter Zühlsdorff
Personnel Committee:
Peter Zühlsdorff (Chairman)
Chairman of the Supervisory Board
Managing Director of Bewerbungskomitee Leipzig 2012 GmbH, Leipzig
Dr. Wolfgang C. Berndt
Klaus Hehl
Finance Committee:
Managing shareholder of
Elmar Wohlgensinger (Chairman)
dih Deutsche Industrie-Holding GmbH,
Hajo Riesenbeck
Frankfurt/Main
Dieter Wilbois
Mergers & Acquisitions Committee:
Klaus Hehl (Chairman)
Kerstin Döpfert
Dr. Christoph Achenbach
Klaus Hehl
from 13 June 2003
Deputy Chairman of the Supervisory Board
Chairman of the Management Board of
Quelle ag, Fürth and Neckermann Versand ag,
Hans-Jürgen Kunert
Frankfurt/Main
until 13 June 2003
Member of the Management Board of
Karstadt Quelle ag, Essen
Robert Raeber
until 13 June 2003
Jörg Bandt
from 13 June 2003
Hajo Riesenbeck
Data Collection Manager,
Director at McKinsey & Company,
GfK Aktiengesellschaft
Düsseldorf office
Dieter Wilbois
Member of the Board of Directors of
Senior Specialist Software Development at
Cadbury Schweppes plc, London, uk
Peter Danzl
Elmar Wohlgensinger
until 13 June 2003
President of the Board of Administration of
iha-GfK, Hergiswil, Switzerland
Kerstin Döpfert
from 13 June 2003
Independent Works Council representative at
6
Report by the Supervisory Board
THE GfK GROUP
REPORT BY THE SUPERVISORY BOARD
In financial year 2003, 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 five times in financial year 2003. 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, as well as discussion
and approval of the annual accounts for 2002 and the budget for financial year
2004. Another main topic was the formation of the new HealthCare division
and the new regulation adopted at the end of the year on cooperation with the
npd Group, usa, in the Non-Food Tracking division. During the reporting year, the
Chairman of the Supervisory Board was in constant contact with the Management
Board.
The term “corporate governance” stands for responsible company management
and control geared towards long-term value added. The Supervisory Board has
dealt intensively with the rules of the German Corporate Governance Code. The
Management Board and Supervisory Board of GfK have been working together
efficiently for a long time. A large number of the Code’s recommendations and
proposals correspond with long-standing practice at GfK. On 16 December 2003,
the Supervisory Board issued a declaration of compliance pursuant to § 161 of
the German Stock Corporation Act (AktG). Deviations are discussed in detail in a
separate section of this annual report on page 18 et seq.
Essentially, the deviations concern the disclosure of the remuneration of individual members of the Management Board and Supervisory Board, adherence
to publication deadlines for the annual financial statements and quarterly reports.
The Management Board and Supervisory Board have agreed a detailed breakdown of remuneration according to fixed and variable salary components, as
well as stock options at executive level. A further breakdown is not planned at
present.
The Supervisory Board supports the measures to gradually bring forward publications on business development. In 2004, the annual report will be published two
weeks earlier than in 2003 and the quarterly reports a maximum of five days later
than required by the Code. As before, our objective is to fully adhere to the deadlines from 2005 onwards, without detriment to the quality of the reports. With
the adoption of its declaration of compliance, the Supervisory Board agreed to
appoint a Compliance Officer (see page 18 et seq. of this report).
7
The Supervisory Board has formed three committees. The 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 financial
resources, issues of financing, as well as questions pertaining to the accounting
system and interim reporting for the company.
The Personnel Committee met four times in 2003. One focal point was the
remuneration of the Management Board. It employed external specialists as
part of the review of the remuneration. An additional important topic was the
GfK Group’s personnel strategy.
In August 2003, the Supervisory Board decided to form a Mergers & Acquisitions
Committee to deal with planned company takeovers. The Committee met once in
2003 and discussed current projects.
In accordance with the Corporate Governance Code, the Supervisory Board
has employed auditors kpmg to examine the effectiveness of its activities. The
audit mainly concerned the work of the Finance Committee, which also takes
over the duties of the Audit Committee. The audit focused on the assessment
of duties, working method and organization of the committee and its members.
On the basis of the audit, the Supervisory Board is to assess existing processes
for monitoring management. The auditing firm came to the conclusion that
the Finance Committee fulfils its duties in accordance with the proposal of the
Corporate Governance Code.
At the Annual General Meeting on 13 June 2003, Robert Raeber resigned from
the Supervisory Board at his own request. The Supervisory Board would like to
thank him for his many years of service and commitment to the GfK Group. At
the proposal of the Supervisory Board, the Annual General Meeting appointed
Dr. Christoph Achenbach to the Supervisory Board. The Supervisory Board will
therefore benefit from the experience of a proven expert in retail and consumer
goods. The end of last year’s Annual General Meeting marked the end of the
term of office of Supervisory Board member Klaus Hehl. He was reappointed for
a new term of office. The Supervisory Board would like to thank both men for
their willingness to actively assist in the further development of GfK over the next
few years. The term of office for new and reappointed members shall run until the
end of the Annual General Meeting which approves the actions of the Supervisory
Board for financial year 2007.
8
Report by the Supervisory Board
THE GfK GROUP
The annual financial statements and management report for GfK ag and the
Group for financial year 2003 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 Supervisory Board
plenum discussed these documents in its accounts meeting, as did the Financial
Committee of the Supervisory Board at its preparatory 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 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 drawn up 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.
Nuremberg, 6 April 2004
Peter Zühlsdorff
Chairman of the Supervisory Board
9
T O O U R S H A R E H O L D E R S A N D B U S I N E S S A S S O C I AT E S
In times of economic difficulty, it becomes all the more important for companies
to prove their strength and stability while continuing to display a spirit of
enterprise. I am very proud that our 5,000-plus employees, working for over
120 companies in 51 countries, have achieved this in such spectacular fashion
by exceeding our quantitative targets for 2003. To quote the theme of this
year’s annual report, we have turned market opportunities into success.
Dr. Klaus L. Wübbenhorst
In terms of growth, we outperformed the German and global economies and
the sector as a whole, while further consolidating our world market position.
The figures speak for themselves:
Chief Executive Officer of GfK ag
We increased our sales by over 6 per cent to eur 595 million.
Our earnings before interest and taxes, including income from participations,
were up by almost 39 per cent to more than eur 69 million.
Our margin of 11.7 per cent is among the highest of any market research
company in the world.
However, it was not only our figures that were good in 2003. We also made
a number of strategic decisions in line with our tradition of turning market
opportunities into success, and I would like to mention two of the most
important here.
Firstly, GfK has continued to expand its pharmaceuticals market research
business over recent years, and in mid-2003 we acquired a majority interest in
v2 (now v2 GfK), the leading us specialist in this area of research. We used
this as an opportunity to pool our healthcare activities within a newly created
business division.
Secondly, our Non-Food Tracking business built on decades of successful
cooperation with us-based The npd Group with a view to expanding into new
regions. We have now begun extending our retail tracking network into the
Central and South American consumer technology markets.
10
Letter to shareholders
THE GfK GROUP
America, the industry’s largest market, became our central focus at the
beginning of 2004 with the acquisition of Arbor (now GfK Arbor) following
careful negotiations during the previous year. This takes us a big step closer
to our strategic objective of having a significant presence in the United States,
and our consolidated sales in 2004 are likely to be well over usd 100 million.
Our business: turning the market opportunities of clients into success
Over the past three years, our clients in the worldwide branded goods,
pharmaceuticals, retail and service sectors have faced difficult market conditions.
The insecurity and economic weakness triggered by September 11, and by
subsequent events in Afghanistan, Iraq and elsewhere in the Middle East, made
it even more difficult to compete in an already stagnant consumer goods sector.
Matters were not helped by the dotcom sector’s failure to grow at anything like
the rate its protagonists had predicted. But once again we found that when times
are hard, market research becomes all the more important, and our sales are
undoubtedly less volatile than those of other sectors of the marketing services
industry.
We performed relatively well because our clients’ survival depends on constantly
identifying opportunities in new and existing segments of the market. This
demands a great deal of vision, marketing flair and business creativity, but it also
takes professional analysis and know-how to qualify and quantify the risks and
opportunities of market decisions – and this is precisely the kind of service that
we, as a market research company, provide.
Corporate Governance: our duty to our shareholders
We aim to achieve constant growth in the value of our company and its shares,
for the benefit of clients, shareholders, employees, and society as a whole. Both
before and after our ipo in 1999, we have shown that we have the creativity, depth
and dynamism to grow and be profitable even in difficult conditions. Our share
price has outperformed the market average, reflecting our investors’ confidence
in us, for which we are very grateful.
11
We are also committed to implementing the German Corporate Governance
Code, which lays down the fundamental principles of responsible business
management. We comply largely with these principles, and will do our very best
to ensure that GfK’s governing bodies work together effectively in the interests
of open and transparent communication with shareholders.
The Supervisory and Management Boards are pleased to announce that they will
be proposing a dividend of eur 0.25 per share at the Annual General Meeting in
June 2004. This represents a 25 per cent increase on last year.
The future builds on the past: continuing the vision of our founding fathers
GfK celebrates its 70th anniversary in the spring of 2004. The market research
industry has its roots in late 19th-century empirical social and economic research,
and GfK is one of the few companies to have been involved at a very early stage.
Since then, we have maintained our identity by pursuing the vision set out by our
founding fathers Wilhelm Vershofen, Erich Schäfer and Ludwig Erhard. Despite
rapid growth over the past few years, making us the world’s fifth largest market
research company, we have remained true to ourselves. We are proud that our
brand is one of the most valuable in the industry, and are doing all we can to
maintain and develop its worldwide identity. In this respect, 2003 was a key year.
We published and implemented our new Corporate Values, drawn up by a group
of young managers from all over the world, and we also launched our modernized
logo, a major milestone in the redesign of our internal and external image.
Outlook: achieving growth and making successful use of
market opportunities
In financial year 2004, as in previous years, we have set ourselves some ambitious
targets. With no changes to the scope of consolidation, we expect sales to grow
by 5.8 per cent to eur 630 million, excluding our us subsidiary GfK Arbor
(acquired as at 1 January 2004 and consolidated for the first time), or eur 650 million
including GfK Arbor.
12
Letter to shareholders
THE GfK GROUP
Once again we intend to outperform the sector, in which experts predict that
growth will be slightly up on last year at between 3 per cent and 4 per cent.
We plan to increase our overall earnings by a higher rate than our sales and
achieve a margin of just over 12 per cent.
What all this means is that GfK’s management and employees around the
world will be working hard to turn market opportunities into success for clients,
shareholders, and the company itself.
I am very grateful to all the staff who contributed to our success in 2003,
and I hope they will continue to show the same dedication on the GfK Group’s
behalf in the future.
Nuremberg, 20 March 2004
Chief Executive Officer
13
THE MANAGEMENT
BOARD
Responsible for Strategy, Investor Relations,
Public Affairs and Communications,
Method and Product Development, it and
Management Development
Chief Executive Officer (ceo)
born 23 February 1956 in Linnich
Professional background
Since 1992 Member of the Management Board,
since 1998 spokesperson, and since 1999 Chief
Executive Officer of GfK ag
Appointed until 2007
Since 1997 Member of the Management Board,
since 2002 Chairman of the Management Board
of adm, the working group of German market and
social research institutes
1992 – 1997 Member of the Management Board
of GfK ag, responsible for Accounting, Finances,
Financial Controlling, Personnel, Purchasing,
General Administration, Minority Interests,
Production, it, Data Processing
of kba-Planeta ag, Radebeul near Dresden
1984 – 1991 Employee of Bertelsmann ag,
Gütersloh, latterly as Managing Director
of the Druck- & Verlagsanstalt Wiener Verlag.
Ges. mbH Nfg. kg, Himberg near Vienna
Training
1984 Doctorate from the Technische Hochschule,
Darmstadt
1981 Graduated in economics from the
Universität-Gesamthochschule, Essen
14
The Management Board
Dr. Franz X. Merl
THE GfK GROUP
Petra Heinlein
Responsible for Financial Services,
Personnel Services and Central Services
Responsible for the Media division
Chief Financial Officer (cfo)
née Dengler
born 7 April 1949 in Regenstauf
born 7 October 1958 in Bad Staffelstein
Since 2002 Member of the Management Board
of GfK ag, appointed until 2007
2001 Integration management on behalf of
of Bayerische Treuhandgesellschaft Aktien-
GfK ag for the Martin Hamblin GfK Group and
gesellschaft Wirtschaftsprüfungsgesellschaft
GfK Great Britain, uk
Steuerberatungsgesellschaft, Munich
2000 Integration Management on behalf of
1988 – 2002 Partner at kpmg Deutsche
GfK ag for GfK Custom Research Inc. in the usa
Treuhandgesellschaft, Berlin and Frankfurt
1992 – 2000 Managing Director of content
1996 – 2000 Member of the working group
census in Frankfurt
Rechnungslegung von Stiftungen (accounting for
1985 Joined GfK as project manager with GfK
foundations) at idw
Marktforschung
1986 – 2002 Managing Director of rtg Revisions
1984 Research Assistant at the Arnold-
und Treuhandgesellschaft mbH, Munich
Bergstraesser-Institut, Freiburg (Germany)
1973 – 1986 rtg Revisions und Treuhandgesellschaft, Wirtschaftsprüfungsgesellschaft
Steuerberatungsgesellschaft, Munich
Training
1984 Graduated in political science from the
Training
University of Bamberg
1983 Qualified as auditor
1979 Doctorate from the University of Munich
1978 Qualified as tax consultant
1973 Graduated in economics from the University
of Munich
15
Dr. Gérard Hermet
Responsible for the
Non-Food Tracking division
born 19 January 1951 in Montpellier,
France
1998 – 2000 Chairman of the French Marketing
Association (afm)
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
Training
1978 Doctorate from the University of Grenoble
1975 Graduated from the French Business School
(icn)
16
The Management Board
Heinrich A. Litzenroth
THE GfK GROUP
Wilhelm R. Wessels
Responsible for the Ad Hoc Research
division
Responsible for the Consumer Tracking
and HealthCare divisions
born 13 December 1951
born 12 October 1952
in Mölln
in Haren
1993 – 1999 Managing Director of GfK
1991 – 1996 Managing Director of GfK AG
Marktforschung GmbH
Gesundheitsforschung/i+g Gruppe Gesundheitsund Pharmamarktforschung
1989 – 1999 Managing Director of GfK
Testmarktforschung GmbH
1986 – 1996 Managing Director of gpi
Gesellschaft für Pharma-Informationssysteme,
1978 – 1989 Employee of GfK, responsible for the
Nuremberg/Frankfurt
development of GfK BehaviorScan in Germany
and building up GfK Testmarktforschung
Training
1977 Graduated in economics from the Freie
Training
1977 Graduated in economics from the University
of Saarbrücken
Universität Berlin
17
C O R P O R AT E G O V E R N A N C E
Since 2002, the German Corporate Governance Code (“Code”) with its recommendations
and ideas, has been added to the statutory regulations. Recognition of these principles
will promote and strengthen the confidence of current and future shareholders, clients,
staff and the public on the national and international markets. GfK supports responsible
management and control of the GfK Group all geared towards increasing value added.
GfK’s existing practices already largely correspond to the recommendations and ideas
of the Code. Thus for over ten years there have been standing rules for the Management Board and 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. Since 2002, GfK has converted its accounts reporting to
the us gaap international standard. In order to make it easier for private shareholders
to exercise their voting rights, GfK appointed a proxy last year. This service has been
extended further. As part of adapting to the Code, GfK will also expand the information
supplied on the Internet.
Pursuant to Section 161 of the German Stock Corporation Act (AktG), the Management
Board and Supervisory Board 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 is
to be made available to the shareholders at all times.
The German Corporate Governance 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. The Management Board and Supervisory Board of GfK ag have
decided to continue the practice begun in 2002 of publishing details of deviations
from recommendations and suggestions. These are reported separately below.
On 16 December 2003, the Management Board and Supervisory Board of GfK ag
declared that they have complied and will continue to comply with the recommendations of the Government Commission German Corporate Governance Code in the
version of 21 May 2003 published by the German Ministry of Justice on 30 June 2003
in the official section of the online Federal Gazette. Only the following points have
not been applied:
1. Recommendations
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.”
(see p. 130 et seq. for details of the stock option programme).
18
Corporate Governance
THE GfK GROUP
GfK’s stock option programme does not include such a cap. Any limitation on the
potential profit would necessarily bring with it a similar limitation on the loss which
is not in the interests of the company. GfK’s management stock option programme is
not an additional remuneration element, but replaces existing variable remuneration
components. This means that eligible persons decide irrevocably to waive part of their
variable remuneration in favour of receiving stock options. Once defined objectives
have been reached, and only then, do they receive the stock options. Whereas the
variable remuneration component is paid once targets have been met, the stock options
cannot be exercised during the first two years. The strike prices for the four tranches
issued to date are as follows:
t1: eur 55.20
t2: eur 41.71
t3: eur 24.14
t4: eur 18.53
The risk/reward profile is therefore balanced and it is not possible to change any
option conditions for tranches which have already been subscribed or issued. The
existing management stock option programme comes to an end with tranche 6.
The company is preparing a further programme, which will be put to a vote at the
next Annual General Meeting.
Pursuant to point 4.2.4, the Management Board remuneration is to be shown for
each individual member (for further details see p. 139).
The remuneration for the members of the Management Board is shown with a breakdown into fixed and variable components and stock options (components offering
long-term incentives). These details are material to the assessment of whether the
split into guaranteed and performance-related portions is appropriate and whether the
remuneration structure provides the intended incentive for the Management Board
members. There are no plans to produce a more detailed breakdown at present.
Pursuant to point 5.4.5, the remuneration for the Supervisory Board members is to
be reported for each individual member in the Notes to the consolidated financial
statements. Performance-related remuneration should also include components
based on long-term company performance (see p. 139 for further details).
As with the breakdown for the Management Board remuneration, the Supervisory
Board remuneration is shown broken down into fixed and variable components.
The Supervisory Board members do not participate in the management stock option
programme. The variable component is based on the proposal on appropriation of
profits passed by the Annual General Meeting and in 2002 was noticeably higher
than the fixed remuneration component. The appropriation of profits depends on a
proposal submitted to the Annual General Meeting by the Management Board and
Supervisory Board. This procedure ensures that there is compromise between the
long-term financing requirements of the company and the legitimate right to a return
on capital employed from the point of view of the shareholders. The company does
not currently believe that it is necessary to introduce any additional indicators to link
remuneration to the long-term success of the company.
19
Point 7.1.2 regulates the publication of the consolidated financial statements
within 90 days and interim reports within 45 days.
The company is aiming to meet these timeframes as of 2005. For 2004, they are
publishing the Annual Report, which contains more than just the consolidated financial
statements, two weeks later than stipulated. Additionally, on 26 February 2004, GfK
published a detailed report on preliminary business growth over the past financial
year and outlined the prospects for future growth, thereby ensuring transparency
with regard to business development. GfK remains committed to complying with the
required deadlines and considers the current practice to be a good arrangement for
shareholders.
The company has been issuing quarterly reports since its ipo, although at the time
this was not compulsory. For the current financial year, GfK will report a maximum of
five days beyond the deadline of 45 days stipulated in the Code. GfK is endeavouring
to shorten the respective reporting timeframes.
2. Suggestions
Point 2.3.3 sets out that 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 company has appointed a representative to exercise the voting rights
as instructed and will continue to do so in the future. The representation of the
shares is assumed in accordance with the agenda. The details are published in the
agenda and on GfK’s website at www.gfk.de/Investor. Voting during the Annual
General Meeting is currently difficult for technical reasons. As soon as a practicable
solution to securely transfer the voting is available, the company will look at utilizing
such a system.
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. on the Internet).
Compliance Officer
Bernhard Wolf
Tel. +49 911 395 2012
Fax +49 911 395 4075
20
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.
The Compliance Officer, appointed by the Supervisory Board in its meeting on
16 December 2003 upon the recommendation of the Management Board, is
responsible for monitoring implementation of the regulations and reports back on
this to the Supervisory Board at least once a year.
GfK will continue to improve communication with shareholders and dealers as well
as the public. The aim continues to be full compliance with the Code.
GfK shares
THE GfK GROUP
GfK SHARES
Financial year 2003: broad upturn
Following three loss-making years, the German dax ended 2003 showing a rise for the
first time since 1999.
However, during the first quarter of 2003, the negative performance of the past three
years initially continued. The Iraq war and its uncertain consequences for the global
economy deterred many investors from putting their money into shares. As at 12 March
2003, the dax had fallen to 2,189, its lowest level since 1995. Based on an historic high
of 8,136 points in March 2000, the index had dropped to almost a quarter of this value
within three years. There had never before been such a fall in the market throughout
the entire history of the German stock exchange.
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
However, following the official end of the Iraq war, the stock markets recovered due
to a number of factors. Economic expectations improved markedly in the usa, Japan
and Europe, interest rates remained stable and company profits had risen noticeably.
As at the year-end, from the March low, the dax had risen by over 80 per cent to 3,965
points.
In 2003, German stocks were well ahead compared to the rest of Europe. Whereas
the dax was able to record a rise of over 37 per cent over the course of the year, the
Dow Jones stoxx 50, the European index, added just 10.5 per cent, the ftse in London
just over 13 per cent and the cac 40 in Paris over 15 per cent. The same applied to
the American Dow Jones Industrial Average, which rose by around 25 per cent and the
Japanese Nikkei Index which was up 24.5 per cent. However, 2003 was primarily
the year for the second-tier stock indices which significantly outperformed the dax.
The mdax gained almost 48 per cent and the tec-dax rose by more than 50 per cent.
The sdax, on which GfK is listed, increased the value of its index even more – by
51 per cent. By contrast, the Dow Jones stoxx Media, which is the sector reference
index, added just 11.7 per cent.
Highest and lowest values of GfK shares from January 2003 to December 2003 in eur
26
25.30
23
21.92
20.29
20
17.96
20.30
18.26
21.68
19.40
17
24.50
22.72
22.15
19.62
17.60
14
13.90
12.52
12.46
11.00
9.51
10.55
14.90
13.30
11
8
15.87
13.39
11.01
Jan 03 Feb 03 Mar 03 Apr 03 May 03 Jun 03
Highest and lowest values
Jul 03
Aug 03 Sep 03 Oct 03
Nov 03 Dec 03
Monthly closing prices
21
GfK share price performance from 1 January 2003 to 15 March 2004 in eur1)
29
24
19
14
9
January 2003
April 2003
1) All values are indexed to the GfK share price
July 2003
October 2003
GfK (xet)
January 2004
Dax 30
MDax
dj Stoxx Media
GfK shares: in the lead with a rise of more than 78 per cent
In 2003, following a three-year lean period, GfK shareholders were able to celebrate
again. With a rise of over 78 per cent the price of GfK shares produced rises considerably above the dax and sdax indices. However, initially the prospects had looked
entirely different. Following a closing price of eur 12.81 at year-end 2002, the share
price fell by 25 per cent through to mid-February to a low of eur 9.51. From then on it
rose sharply by 166 per cent up to the year’s highest value of eur 25.30 by the end of
November. As at 31 December 2003, the share price closed at eur 22.82. The issue
price at the time of the GfK stock market flotation in 1999 of eur 18.50 was overtaken
once again on 23 July 2003. The fluctuation in the share price over the whole of 2003
was between a low of eur 9.51 and high of eur 25.30.
GfK share price performance comparison
In 2003
From IPO to
15. 03. 20041)
GfK ag
+ 78.1 %
+ 47.0 %
Dax
+ 37.1 %
– 27.3 %
SDax
+ 51.3 %
– 1.5 %
dj Stoxx Media
+ 11.7 %
– 37.9 %
1) Issue price during Initial Public Offering (ipo) on
23. 09.1999: eur 18.50
As at year-end 2003, original shareholders – disregarding dividend payments –
have seen their shares gain 23.4 per cent in value. This corresponds to annual
interest on the invested capital of 5.1 per cent. If shareholders reinvested their
gross dividends, including corporation tax credits until 2000, in GfK shares, as
at 30 December 2003 they had achieved an annual return of 5.8 per cent. Over
the same period, an alternative investment in bonds would have returned an average
yield of 4.6 per cent p. a.
Share evaluation: twelve investment analysts reported back
GfK attracted interest in the financial markets for two reasons: firstly, its successful
operating business in 2003 and, secondly, the above-average rise in the GfK share
price. The excellent growth in the sdax index also increased investor focus on second-
22
GfK shares
THE GfK GROUP
tier stock in 2003. At the same time, the consolidation process in the research
departments of banks was largely completed. The slump in the stock markets forced
financial institutions to offset falling revenue by downsizing their analysts’ departments. In some cases monitoring of whole sectors has been affected.
GfK shares: key indicators
Unit
2002
2003
High
EUR
24.30
25.30
Low
EUR
11.50
9.51
Close
EUR
12.81
22.82
Average daily volume traded
No.
13,904
16,030
Number of no-par shares
No.
26,121,998
26,121,998
EUR m
334.6
596.1
in %
15
8
2.79
15
4
3.77
0.25
Market capitalization as at 31.12.
Rank in SDax
by sales
by market capitalization
Index weighting by market capitalization
Dividend
EUR
0.20
EUR m
5.2
6.5
Earnings per share
EUR
0.98
1.28
Free cash flow1) per share
EUR
1.55
1.85
Total dividend
1) Before acquisitions, other investments and asset disposals
At year-end 2003, only ten of the previous 15 institutions rated GfK shares. However,
since the start of 2004 two more banks began covering our shares, so that currently
twelve respected institutions regularly publish assessments and recommendations on
GfK shares. GfK is carrying out other discussions with international banks. Balanced,
independent reporting on the financial market is guaranteed.
Shareholder structure: free float spread internationally
Over the past year, the GfK shareholder structure has not altered substantially.
GfK Nürnberg e.V. is still the largest shareholder with a 64 per cent holding as before.
The total free float of 36 per cent breaks down as follows: the Management Board and
the Supervisory Board still hold 2.3 per cent of the share capital, while 14.6 per cent
is in the hands of private investors, representing a rise of 2.3 percentage points on
the previous year. This increase is attributable to institutional investors whose holding
fell by 21.4 per cent to 19.1 per cent. At year-end 2003, 57 institutional investors
held investments in GfK shares. 6.2 per cent of all shares were held by instititutional
investors from the usa (2002: 5.2 per cent), 5.8 per cent from the UK (2002: 7.8 per
cent), 3.4 per cent from Germany (2002: 5.4 per cent) and 2.5 per cent from France
(2002: 2.2 per cent).
23
Current shareholder structure
GfK-Nürnberg e.V.
64.0 %
Institutional investors
19.1 %
of which usa
6.2 %
uk
5.8 %
Germany
3.4 %
France
2.5 %
others
Private investors
Management Board and Supervisory Board
1.2 %
14.6 %
2.3 %
GfK shares in sdax: position improved
As at 24 March 2003, as part of restructuring the stock market, Deutsche Börse
downsized the mdax from 70 to 50 companies, which means that since then,
GfK shares have been listed in the sdax instead of the mdax.
On the sdax, since this reallocation GfK has risen from 8th position to rank 4th following market capitalization of the free float. Its index weighting rose from 3.1 per cent
in March to 3.8 per cent in December 2003, peaking at 4.1 per cent in September and
November. At year-end 2003, GfK lay in 15th position based on sales of shares, and
its average trading volume also showed a marked improvement. Over the past year an
average of 16,030 shares a day were traded compared to 13,904 a day in 2002. The
busiest periods were April, May and September with average trading volumes of over
20,000 shares a day.
Dividends: another increase planned
At the Annual General Meeting, the Management Board and the Supervisory Board
will propose a shareholder dividend of 25 cents per share, an increase over the
previous year of 25 per cent. The total dividend paid out will therefore increase from
eur 5.2 million to eur 6.5 million. To allow shareholders to participate in the economic
success of the company, GfK has increased the dividend annually since its flotation
on the stock market. The proposed dividend for 2003 represents an increase of over
92 per cent compared to the initial dividend of 13 cents for 1999. The pay-out ratio is
19.5 per cent.
24
GfK shares
THE GfK GROUP
Stock option programme: continues to be attractive
At year-end 2003, management staff once again had the opportunity of exchanging
part of their bonus for stock options. A total of 605,193 options were offered, of which
485,002 options were subscribed. This corresponds to an acceptance quota of 80.1 per
cent.
This subscription is based on the stock option programme approved at the Annual
General Meeting on 13 June 2002. After this year’s Annual General Meeting on 15 June
2004, three tranches may be exercised: tranche 1 of 389,165 options at a price of
eur 55.20 and tranche 2 of 375,725 options at a price of eur 41.71. The third tranche
comprises 380,300 options at a price of eur 24.14. The high strike prices mean
that the first two tranches are not in cash, unlike the third tranche. Of course it is
impossible to know in advance how many options will be exercised. However, it is
agreed in the terms and conditions that the sales are carried out in such a way as to
safeguard the shareholders’ as well as the company’s interests and avoid any effect on
prices. Based on current demand for GfK shares, GfK is anticipating that the shares
can be easily placed.
25
I N V E S T O R R E L AT I O N S
In 2003, as in previous years, up-to-date and open communication with institutional
investors, investment analysts, private investors and financial journalists is the focus
of Investor Relations activities. The aim of this work is to create the conditions for
ensuring efficient formulation of opinion on the situation of the company and on the
future prospects for GfK in the capital market.
Shareholders: more intensive dialogue
Around 400 shareholders and shareholder representatives attended the Annual
General Meeting in Nuremberg on 13 June 2003, representing almost 70 per cent
of all shares. As in previous years, shareholders were able to follow the event live
via the Internet up until the start of discussions. The discussion over the 2002
financial statements highlighted the healthy growth in GfK sales and total income.
GfK shareholders approved the strategy for international expansion and expansion
of the company network.
Other events attended by GfK:
Seven international investor conferences
Two dvfa analyst conferences
Nine roadshows in the usa, uk, France, Switzerland, Holland, Austria and
Germany
Nine teleconferences
93 individual conversations with fund managers and investment analysts
Invest 2003 in Stuttgart, one of the largest German investor fairs
Munich stock exchange open day attended by approx. 2,500 visitors
GfK website: Investor Relations information expanded
GfK continues to place high priority on providing more information on the Internet.
The Investor Relations section of the website contains quarterly reports, annual
reports, presentations, recordings of the Annual General Meeting and the accounts
press conference, as well as assessments by analysts and consensus of opinion.
Additionally, interested parties will find information on share prices which goes far
beyond the minimum standard applicable to German company websites. In the latest
updated Internet version on GfK shares, apart from current share price data from the
German stock exchange, there are also details on share price changes in relation to
comparable indices as well as individual daily sales. Tick data show the price and
volume of capped orders to buy and sell. It is also possible to calculate the total
income from personal shareholdings in GfK, including the change from the date of
purchase, both in absolute terms and as a percentage. For investors who like to study
charts, the chart analyzer offers additional features.
26
Investor Relations
THE GfK GROUP
Publications: consulted and recognized
The annual report is the most important printed presentation of the company image
for GfK. The efforts in recent years aimed at improving the quality of the content and
presentation have paid off. In the overall evaluation of annual report rankings by
Manager magazine in Germany, the Annual Report 2002 scored very well, achieving
third place among the 50 companies in the sdax and nineteenth place among a total
of almost 200 annual reports from listed companies on the stoxx50, dax, mdax, sdax
and tec-dax.
In addition to the annual report, GfK publishes three quarterly reports containing
extensive information on the various company divisions. At the end of February,
GfK also published the provisional annual result.
Since May 2003, GfK has regularly published a shareholders’ newsletter, gfk impuls,
following publication of the quarterly figures, thereby increasing its contact with
private shareholders. The newsletter provides information, in condensed form, on
business development, share price performance and anything important concerning
the GfK Group and the market research sector. It is mainly distributed online and
investors may subscribe to it by e-mail at investor relations@gfk.de or via the website
at www.gfk.de. Back issues may be downloaded.
Furthermore, for anything important, GfK contacts its shareholders by e-mail, fax,
ad hoc notifications, post and teleconference.
Provisional key dates in the financial calendar
15 April 2004
15 April 2004
19 May 2004
15 June 2004
19 August 2004
18 November 2004
24 February 2005
31 March 2005
31 March 2005
13 May 2005
24 May 2005
12 August 2005
15 November 2005
1) Publication is scheduled for before the start of the trading session
27
BUSINESS DIVISIONS SPECIAL
Identifying and utilizing market opportunities at an early stage – these factors are more
crucial than ever when it comes to the success and future prospects of companies operating
in consumer goods markets. This applies to global organizations as well as smes. Success
depends largely on knowledge of the attitudes, behaviour and preferences of consumers and
users of brands, products and services.
Modern marketing research, such as that conducted by GfK, supports customers in industry,
retail, media and the service sector by providing them with the knowledge of markets and
consumers necessary to turn market opportunities into success.
An interview with an expert on the future of brands, advertising and marketing research as
well as reports on the five GfK divisions and the theme of innovative methods all highlight
the ways in which marketing research fulfils this function.
INDEX
Our mission is to get attention
on behalf of our clients
Page
30
Allen Rosenshine, head of bbdo Worldwide, on the future
of brands, advertising and marketing research
According to Allen Rosenshine, the principles of building
and maintaining brands have not changed over the decades.
However, the world of media has become far more complex,
making it increasingly difficult for companies and retailers
to reach consumers. Getting attention on behalf of consumers
and towards his company’s brands is therefore the key
success factor.
How Nerino Grassi
made it to the top
How hosiery manufacturer Golden Lady
stayed up in a falling market
Golden Lady, which is part of Europe’s
leading hosiery manufacturing group, is a
perfect example of the fact that times of
28
crisis can also be times of opportunity. In
addition to innovation and high quality
standards, sound knowledge of consumer
requirements and the markets are what give
the company its competitive edge.
Page
36
B U S I N E S S D IV I S I O N S
SPECIAL
Page
44
The hp formula for success:
innovation and intuition
Trust, teamwork, flat hierarchies and
consumer consideration
According to Kasper Rorsted, hp’s Managing
Director for Europe, Middle East and Africa,
Page
52
the future of the it sector, with its
accelerated innovation, has only just
begun. Market research helps identify
consumer trends early and convert
these into successful product ideas.
Cutting through
the competitive jungle
The hard facts about selling magazines
successfully at Budapest-based Sanoma
the fast-growing Hungarian media market.
A successful strategy – as proven by the
market share of over 30 per cent.
The Hungarian publishing house, Sanoma,
combines comprehensive market and
media research to ensure its survival in
Page
60
Winning over the client
with new ideas
Market research to support McDonald’s
with their new brand image
Eating habits change and young people
have different ideas on what they want
Page
68
The pharma market is one of the most
complex and fiercely competitive markets.
76
from “their” eateries and so McDonald’s
is tailoring its brand image to suit the
current needs of its target groups. Market
research made a major contribution to the
new direction.
Spotlight on the healthcare system
and the interests of doctors and patients
Pfizer’s consistent quality, innovation and
market analysis
Page
Making yourself heard
in the hubbub of advertising
Innovative ways of making media
planning more efficient and effective
for Kraft Foods
In a world of shifting consumer habits,
coffee brand manufacturers are constantly
For Pfizer, global brand leaders in
human medicine, this means the rigorous
application of the corporate philosophy
and exploiting opportunities on the basis
of in-depth market analysis.
being faced with new challenges. Kraft Foods
has responded by seeking to consolidate
and expand the market position of “Jacobs
Coffee”, its top brand, with the aid of new
marketing and media research methods.
New Yorker Allen Rosenshine has
been an advertising expert for 40 years
and works at the BBDO headquarters
on New York’s 6th Avenue
Brands, communication and market research
GfK SPECIAL
Allen Rosenshine, Chairman and ceo of bbdo Worldwide discusses brands,
communication and marketing research today
Our mission is to get attention on behalf
of our clients
“Branding requires understanding our audience and why they think as they do,” states Allen
Rosenshine, head of the most awarded agency network in the world, bbdo, and founder of the third
largest global advertising organization, Omnicom.
Allen Rosenshine, one of the top advertising
experts worldwide, describes the challenges
faced by traditional and new forms of advertising
today and outlines the significance of marketing
research for successful brand communication.
Please define the key role of advertising and
communication.
To the extent that advertising is the business of
branding, the focus of advertising has to be on
client audiences. The ultimate targets are the
purchasers of the brand. At the risk of being overly
simplistic, I believe that our job as communicators
in advertising and in the general communication
business is to provide the competitive reasons why
one brand is superior or should be purchased
rather than another.
It is important to draw a distinction between classic
advertising in classic media and new forms of brand
communication, which have become available
to us through new technologies and which are
increasingly becoming part of the communication
mix. By advertising I mean classical advertising
in mass media, such as television, print, outdoor
and radio. When we talk about integrated communications or other forms of advertising, I think
of everything associated with below-the-line
activities. Whether direct response, point of
purchase, new customer relationship management
models and, of course, the Internet, these activities
have become more and more poignant.
Allen Rosenshine
Allen Rosenshine, 65, was named as one of the top
100 most influential men in the advertising industry of
the century by Advertising Age, a weekly us advertising
magazine. Rosenshine has been with bbdo since 1965,
first as a copywriter, from 1975 as the creative director
and subsequently as head of the New York office. In 1985,
he became ceo of bbdo Worldwide and a year later he
became a founder of Omnicom, one of the top three marketing and communication conglomerates in the world.
Rosenshine was ceo of Omnicom until 1989, when his
love of advertising enticed him to swap his ceo position at
Omnicom for that of ceo and Chairman at bbdo Worldwide. bbdo, which achieved sales of over usd 16 billion
in 2003, has 345 offices in 76 countries and more than
20,500 employees across the globe. The third largest
agency network in the world, it has received many awards
for creative services and since 1999, has been annually
cited the most creative agency network of the past five
years in the Gunn Report.
Rosenshine was a Board member of both the Association
of American Advertising Agencies (aaaa) and the International Association of Advertising Agencies (iaaa).
He is also a member of the Board of the Partnership for
a Drug-Free America, as well as Chairman of its Creative
Review Board.
What distinguishes the classical from the new
forms of communication?
None of the new forms of advertising enables us to
approach the consumer or the customer on behalf
of the brand with the full range of communication
tools. Television advertising is clearly the most
significant when it comes to creating an emotional
bond between the user or purchaser and the
31
The principles behind successful brand communication
do not really change.
The weight has shifted from the classical to
the new forms, but not nearly as quickly or as
dramatically as the proponents of the new forms
predicted, especially before the dot-com bubble
burst. Not only was there no demise of classical
advertising, but the use is as heavy as ever. The
opportunities to communicate through new forms
have increased. We would therefore expect a rise
in overall expenditures, and this has been the
case, except in the past couple of years which
have witnessed an economic downturn. However,
I firmly believe that once we come out of the
recession, we will see expenditures that surpass
previous levels. This is already beginning in 2004.
If we can achieve the level of 2000, that would be
good.
What does it mean to build brands and to
communicate in the “attention economy”?
The principles of building and maintaining brands
do not really change. The basis of what built a
brand 50 years ago is no different than the basis of
what builds a brand today. The competitive milieu
is different, globalization has changed the branding process. At the same time, technology has
dramatically altered the way in which we can
communicate brands. However, the fundamentals
of a brand, premium brand or low-cost brand,
have not changed and neither has the consumer’s
desire for these.
»Our biggest concern is how to take a given client’s
budget and apply it in such a way that his particular
brand will be best communicated to the consumer,
who has increased choice but no more time than
before.«
brand. To the extent that brand relationships need
to be built on emotion, I cannot conceive of how
we will replace the capacity of film or tape, or
sight, sound and motion to create an emotional
bond.
32
The key is to keep up with consumer adaptation
of usage of the classical as well as the new
media. Looking at the history of communication
vehicles and media, it is very hard to think of
any medium that has become extinct. It was
thought that videotape would eliminate film. That
did not happen. Equally, that television would
be the end of radio. That did not happen. Or that
various new forms of communication would
mean the end of printed communication. Yet book
sales are higher than ever. At the end of the day,
each form of communication is unique. People will
GfK SPECIAL
Rosenshine: our job
is to find competitive
arguments as to why
our client’s brand is
better.
not give up one for another. They may shift over
time and spend more time with one than another.
However, there are only a limited number of hours
in the day.
For us as communicators, the issue is therefore
to understand how consumers are managing
their time. A colleague uses the expression
“attention economy”, meaning that our mission
as advertisers is to get attention on behalf of
our clients. To do this, we need to be able to
manage a diverse set of media, which did not
exist fifty, twenty or even ten years ago. Our
biggest concern is how to take a given client’s
budget and apply it in such a way that his
particular brand will be best communicated to
Advertisers work in a reactive business in the sense
that they do not invent trends or how consumers
think or feel. They cannot make consumers do
something that they do not intrinsically want to do
– despite what all the critics of advertising might
have you believe.
If they could, why is it that 75 or 80 per cent of all
new products fail? If we are so good at manipulating
a consumer into buying things that he does not
want, how do we explain the fact that the consumer
rejects most of what we put out?
Therefore the interplay between market research,
consumer research and the business of designing
»Advertisers cannot make consumers do something that they
do not intrinsically want to do – despite what all the critics of
advertising might have you believe.«
the consumer, who has increased choice but no
more time than before. It is no longer
simply a matter of statistics – i. e. the highest
rating of a TV show for the lowest possible
price. It is now about reaching people not only
in terms of overall impressions, but in terms of
their receptiveness and willingness to consider
the message at a given point in time.
How would you define the interplay between
marketing research and advertising?
In my view, the need for fundamental understandings produced by market research is
greater than ever. Our information requirements
may have changed, and also the need for market
research that goes beyond the “left-brain
approach” to understand consumers by including
psychographics and aspects that drive consumers
emotionally as well as rationally. These needs are
critical and their role in market research is not
less, but in fact more prominent than in the past.
33
»Marketing instinct is needed, but also the ability to quantify and
predict how the marketplace and the consumers will react.«
products, positioning them and then communicating them has never been greater. This is why the
interplay between the disciplines is absolutely
critical. Marketing instinct is needed, but also the
ability to quantify and predict how the marketplace
and the consumers will react.
What is your take on “Think global, act local”
versus “Think local, act global”?
If I had to choose between “Think global, act local”
or “Think local, act global”, I believe that “Think
local, act global” is more realistic in view of
globalization. The notion that the world will become
standardized as originally outlined by Theodore
Levitt has proved wrong. Standardization of the
human condition is not what globalization is about.
“Think global, act local” means that if you think
globally you are thinking in terms of standardization
and executing that standardization everywhere.
The fact is that this is not feasible. People will
not give up their heritage, their national pride or
identity – even in the context of the European
Union and the Euro. Ultimately, none of these
aspects is going to eliminate the fact that you
have to think local and not just act local. “Think
local, act global” is the more relevant of the two
iterations. You first need to understand people
and this means understanding them locally.
Once you understand the differences, you can
successfully act globally. Today it is more important than ever to reach
consumers in terms of their willingness to consider
the message at a given point in time.
34
GfK SPECIAL
Global marketing and advertising market
In 2003, advertisers spent an
estimated usd 751.5 billion on
advertising, below-the-line
Share of total sales by region
in usd billion
activities, pr and market research.
2002
2003
Growth in
2003 in %
Share in %
Total
730.8
751.5
2.8
100.0
of which advertising1)
316.5
327.2
3.3
43.5
below-the-Line 2)
316.2
322.2
1.8
42.9
market research
17.6
18.1
3.0
2.4
6.3
6.7
6.3
0.9
–
10.3
–
–
pr
other3)
1) tv, print, radio, film, outdoor and the Internet
2) Mailshots and other direct mailing activities, consumer and b2b promotions including sponsoring
3) Mainly sector directories
The usa is by far the largest
Ad-spend in the major regions and countries
in usd billion
national advertising market worldwide, followed by quite some
2003
distance by Japan and then – again
by quite some distance – Germany
and the uk.
Share in %
Total
327.2
100
America
153.4
46.9
Europe
77.0
23.5
Asia
64.4
19.7
Other
9.9
Source: Zenith Media
In 2002, Procter&Gamble spent a
total of usd 45 billion on advertising
and is therefore the No. 1 advertiser
The ten major advertisers worldwide
in usd billion
worldwide.
Ranking 2002
Advertiser
Global ad-spend
in 2002
in USD million
Change on
previous year in %
1
Procter&Gamble
4,479
21.9
2
Unilever
3,315
19.2
3
General Motors
3,218
9.0
4
Toyota Motor
2,405
11.2
5
Ford Motor
2,387
7.2
6
Time Warner
2,349
2.4
7
DaimlerChrysler
1,800
0.5
8
L’Oréal
1,683
15.4
9
Nestlé
1,547
– 4.2
Sony
1,513
22.2
10
Source: Advertising Age, 10 November 2003
35
36
Consumer Tracking
GfK SPECIAL
How Nerino Grassi
made it to the top
Staying up in a falling market
37
Staying up in a falling market
How Nerino Grassi made it to the top
The Italian company, Golden Lady S.p.a is a perfect example of the fact that times of crisis can
also be times of opportunity. In a recessive market, the manufacturer of hosiery and lingerie
has been able to win market share, increase sales and profits and become the market leader.
The key factors behind this success are innovation, perfect production and organization, as well
as consumer consideration.
When a market shrinks by 50 per cent in less
than ten years, it is not only pessimists that speak
of giving it up as a bad job, and withdrawing.
Not so for a full-blooded entrepreneur who, even
in the worst possible market conditions, leaves
the competition for dust with their figures in the
red and off-season sales on brands and machines.
Generating growth and quietly making his way to
the top. This is the story of Nerino Grassi, owner
and Managing Director of Golden Lady who, from
the Italian Castiglione delle Stiviere, penetrated
the women’s hosiery market.
Grassi started up his Golden Lady brand in 1967
with 50 hosiery machines. This was the time of
easy profits for producers of tights and stockings.
The material-saving trend of fashion designers
which found its form in mini-skirts all added to
the demand of the woven textile with its inherent
Mini-skirts pushed up
the demand for tights.
Nerino Grassi
The founder and owner of Golden Lady believes that
the success of his company and the brands Golden Lady,
La Omsa and Sisi is attributable to technology and
innovation, communication, consistently high product
quality and a good price/performance ratio.
sex appeal; especially of tights, which, to the
consternation of young men on their ‘voyage of
discovery’, had more or less replaced the ‘nylons’ –
first with and later without the distinctive seam –
complete with suspender belt.
The staying power of nylons
At that time, sales prices, too, were still a source of
optimism for manufacturers, even though the most
profitable times were gone. In the 1940s, shortly
after the nylon fibre was invented, ladies’ fashion
nylons cost usd 250 and were seen as luxury
gifts, for example in post-war Germany, where GIs
wanted to discover the secret of alluring German
women. Much-admired ambassadors of the trend
38
Consumer Tracking
GfK SPECIAL
Golden Lady’s
corporate aim
is to be
“best friend”
to millions of
women
were Hollywood beauties such as Rita Hayworth
and Jane Russell , who showed on screen how
shapely legs could look in stockings – and the
negative effect of ladders.
Over the years, however, fierce competition among
hosiery brands in Europe and overseas resulted
in falling prices. While many initially successful
manufacturers gave up, Golden Lady persisted
and slowly but surely made its way to the top, first
in Italy. In 1978, Grassi acquired another brand –
La Omsa – and expanded into Germany. Production
sites were later set up in France and the uk, with
sales companies at work in France, Germany, the
uk and Spain. With its three brands, Golden Lady,
La Omsa and Sisi, and Nerino Grassi and a
committed team of managers at the helm, Golden
Lady S.p.a. is among the market leaders or even
leading the way in most European countries.
Russia, for example, is the second largest market
for the Golden Lady Group after Italy.
In 12 of the 15 eu countries the hosiery market is
stable, even showing signs of slight growth, with
manufacturers achieving sales worth almost
eur 2.5 billion every year. However, the market is
still experiencing a downward trend. In Germany,
the market total for 2003 was eur 0.40 billion,
eur 0.52 billion less than in 2002.
Success stretching as far as the usa
Grassi’s expansion course stretched right across
the Atlantic. In the usa, he took over the second
Golden Lady Group
One of Europe’s leading hosiery manufacturers
Founded in 1967 by Nerino Grassi, who as head of the
company has driven and continues to drive the Golden
Lady business.
Mission statement
A successful company which takes all the opportunities a
market offers. The Golden Lady Group rests on consolidated
values and glares with innovation so that consumers return
again and again. But the hard won position of Golden
Lady is never a point of arrival, but a point of departure,
to conquer the leadership on each market where the
Group is present.
Market positioning
With seven factories and 3,000 employees, Golden Lady
manufactures around 250 million hosiery items per year,
which are sold in Europe under the brand names of
Golden Lady, La Omsa and Sisi. The company also makes
underwear and beachwear.
In Europe, Golden Lady also distributes its products in
over 300 outlets trading under the name GoldenPoint.
The company is a market leader in Italy and Russia,
generating sales in Europe of eur 310 million in 2003.
In addition, Golden Lady has a production site in the usa,
where the end product is sold under the No Nonsense label.
39
The latest production technology and continuous quality
control are key success factors
Production sites and processes have to be
constantly updated and perfectly organized.
Production and sales stages are integrated
under one roof, from the manufacture of the
thread right through to spinning, knitting,
dyeing and distribution to the consumer. “This
was the only way to withstand the collapse in
the market, because we were able to keep
margins and profits high enough,” explains
Grassi. An important factor, not least because
it facilitates continued investment in research
and development.
The price/performance ratio must be within
the optimum range. Customer satisfaction
is key to every long-term success, and here
Grassi is of the same opinion as other
successful entrepreneurs. This is why Grassi
has constant and thorough production checks
carried out. Where his company’s philosophy
differs from many others, is that these include
the lowest price levels. “Quality comes first,
whatever the circumstances,” says Grassi
fervently.
It is necessary to invest heavily in communication, including advertising and promotions.
largest manufacturer, Kayser Roth, with own
brand “No Nonsense” and designer brands
(including Calvin Klein). With 150 million tights
sold, the company represents 18 per cent of the
market. 1,500 employees helped generate sales
of usd 250 million, which is exactly the same
amount as before the takeover, but with 1,400
fewer staff.
Excluding its us subsidiary, the Golden Lady
Group has a staff complement of 3,000 and
generates sales of eur 310 million in seven
factories. These cover 300,000m2 and around
250 million pairs of tights and other products
are manufactured on 3,800 machines. Grassi
has three key principles by which he runs his
business:
40
Alessandra Bocchi
Key account manager at GfK IHA Italia, responsible for
the Fashion*Scope textile panel in Italy, advises the
Golden Lady management.
Consumer Tracking
It was exactly in the difficult years from 1989
to 1992 that Golden Lady launched a lavish
advertising campaign. Hollywood star Kim
Basinger was the legs of Golden Lady, raising
the Italian brand’s profile on screen. Today,
an Italian star communicates the Golden Lady
message of being ”best friend to millions of
women in Italy and Europe.“ Grassi invests
18 per cent of the company’s sales revenue in
advertising and promotion every year.
Reasons why the market sagged
It goes without saying that market research as an
instrument plays a major role in all activities.
GfK supplies the required data in many countries,
including for example monthly base figures for
the hosiery market. “We monitor our position in
the individual markets very carefully,” adds
Grassi. “Given that we invest a lot of money in
communication, we obviously want to know
how successful this has been, as well as how our
brand value is developing.”
GfK SPECIAL
»While many initially successful manufacturers
gave up, Golden Lady persisted and slowly but
surely made its way to the top, first in Italy.«
The Golden Lady Group also uses market
research in its latest activities, such as the lingerie
market, explains Alessandra Bocchi, key account
manager at GfK iha Italia, responsible for the
Fashion*Scope textile panel in Italy. Nerino Grassi
and his management team are not content with
having successfully survived the downturn in
the ladies’ hosiery market and found answers as
to why
new yarns are increasingly replacing nylon
and low denier tights last longer than before,
so consequently sales of these are down,
women prefer wearing jeans and other trousers
to skirts and dresses, and a more informal
lifestyle has led to higher sales of socks instead
of tights. Golden Lady has its
own design department which monitors
and influences
fashion trends
41
»Given that we invest a lot of money in communication,
we obviously want to know how successful this has
been, as well as how our brand value is developing.«
Golden Lady
products are sold
he is up against a country which has begun the
long march to the top: China. There, manual
work is extremely cheap and even today, bras
and knickers are still hand-made rather than
machine-produced.
throughout Europe,
in modern retail
outlets as well as . . .
Since 2001, Golden Lady has also set itself the aim
of establishing its own sales network under the
name Goldenpoint, for closer customer proximity
in Italy and large European cities. “This is the
answer to the requirement of women who value
a wide selection combined with the service of
a specialist outlet,” says Grassi, who believes that
companies must be able to predict new trends
and take an innovative approach to implementing these. This applies to the type, content and
performance of a product, as well as to the production and distribution processes. This is how to
manage change in the markets – even far-reaching
change.
. . . in markets and
street stalls in Italy
and other major
Southern and
Eastern European
countries
Having conquered one market, it was time to
move into others, and this sparked production
of lingerie, as well as ladies trouser socks. The
acquisition of the Filodoro brand from the Sara
Lee Corporation is a further marker of Golden
Lady’s expansion plans. Grassi has a hard task
ahead of him, however. In the underwear market,
“The secret of Nerino Grassi’s success and
that of his family is an entrepreneurial spirit and
passion for the products,” explains Gianluigi
Pirani, General Manager at Golden Lady, who
has co-run the company with Nerino Grassi for
many years. The other crucial factor for the
Golden Lady Group is the unshakeable belief in
efficiency and quality at every level. GfK IHA Italia S.p.a., Italy
Provider of information on fast moving consumer goods
from the GfK ConsumerScan panel, part of the Consumer
Tracking division
Established: 1994
Key clients: Bolton Group, Danone Group, Ferrero,
Henkel, Kellogg’s, Lavazza, l’Oréal, Nestlé, The Coca-Cola
Company, Unilever Group
Key markets: food retail, household cleaning products,
cosmetics, textiles
Employees: 42
42
Consumer Tracking
GfK SPECIAL
Consumer Tracking division:
Specializing in the purchasing and consumption behaviour
of end consumers
Market positioning
GfK Consumer Tracking ranks
2nd in Europe in the area of
continuous consumer research
and is the market leader in
Austria, the Benelux countries,
Germany, Italy, Scandinavia,
Switzerland and the Central and
Eastern European countries.
Our key services
We offer information services,
advice and solutions providing
support for the marketing
decisions of manufacturers,
retailers and the service sector,
which enable these to successfully operate in the markets
for fmcg, consumer goods and
services.
In detail
We provide clients with continuous information about
purchasing and consumer
behaviour. As part of our panels
we regularly record consumer
purchases over long periods
of time and collect such information from the panel
households.
The findings based on this
information comprise sound
analyses of
the structure of markets and
how these change
changes in preferences with
regard to manufacturer and
retail brands in all relevant
product categories and buyer
structures over time
brand loyalty and shopping
outlet preference
the efficiency of promotional
and advertising activities
in terms of sales and the
attractiveness of brands.
The aTRACKtive software
developed by GfK for the
specific purpose of analyzing
consumer and household panel
data offers a high level of flexibility. It enables users to prepare
numerous special in-depth
analyses, which go beyond the
scope of standard reporting and
are tailored to clients’ required
focus on detailed buyer group
segmentation.
The information for these
analyses is sourced from
GfK ConsumerScan and
GfK ConsumerScope, two
different services that are
based on consumer surveys.
GfK ConsumerScan comprises
household and consumer
panels on fmcg in 17 European
countries. Via a network of
partner companies throughout
Europe, GfK supplies information for almost all European
countries. ConsumerScan provides information about buyer
characteristics, attitudes and
penetration, supply and demand,
brand loyalty, parallel brand
consumption and much, much
more.
GfK CatmanGuide is a service
system for category management of fmcg. We support
clients in their efforts to
optimize their brand offering
in cooperation with retailers.
GfK’s ConsumerScope package
of services delivers information
about smcg to clients, e. g. data
on textiles, toys and books as
well as on travel, financial and
telecommunications services.
The data is collected via online
and mail panels in nine European
countries.
The benefits
Clients use partly standard,
partly customized information
packages to manage their
tactical and strategic decisions
on product and pricing policy,
distribution and category
management, advertising and
promotional activities. The
consulting services offered by
our team of client advisors
support clients in their decisionmaking.
Our clients
Multinational companies as well
as smes from retail and industry
operating in consumer goods
and services form the client base.
Our top clients include Henkel,
Unilever, Procter&Gamble and
Nestlé.
Focus for 2003
Europe-wide rollout of the
aTRACKtive software
Upgrading the Internet
platform aTRACKtive.web to
provide clients with direct
access to consumer panel
databases
Development of e-cpo
(European Consumer Panel
Online), a system for recording purchasing data via the
Internet
Enhanced range of services
in textiles research
Increased number of random
panel samples in several
countries
Above-average development
of category management
business
Improved European data
integration
Advancement of cost-cutting
programme 43
44
Non-Food Tracking
GfK SPECIAL
Trust, teamwork, flat hierarchies and consumer market analysis as prerequisites
45
Trust, teamwork, flat hierarchies and consumer market
analysis as prerequisites
The it sector will continue to excel with high rates of innovation and an above-average need
for information for decades to come. In 2003 alone, hp was awarded 21,000 patents worldwide,
up from 17,000 in fiscal year 2002. This equates to some 11 patents being generated per day,
double the rate of fiscal year 2002. A large in-house marketing research department and intensive
worldwide cooperation with GfK help the global company to recognise developments and trends
at the right time, to structure its processes and safeguard its decisions.
The Managing Director of hp for Europe, Middle
East and Africa (emea) does not like to read
instructions if presented old-style. This is why
Kasper Rorsted has recently gotten himself
a new mobile phone and dispensed with the
complicated model purchased from another
mobile manufacturer. “Intuitive usability” is
what Rorsted demands and in doing so, he
sums up an essential core value that is part of
the basic operating code of it company hp.
“Our actions and decisions are always taken with
the customer in mind.”
“Uncompromising integrity” is another core value.
By this, the people at hp understand openness
and honesty in all business relationships as the
basis of client trust. The set of values also includes
“groundbreaking innovations” and “speed plus
HP is much more than
just a manufacturer
of printers and pcs.
The company offers
a range of different
it products and
services to both
corporate clients and
individual users.
46
Kasper Rorsted,
Managing Director Europe, Middle East and Africa:
We require a vast variety of information to find an answer
to the question, ‘how can we make it as easy as possible
for people to use our devices?’
flexibility”, as well as results orientation, teamwork and respect between staff and customers.
“Our aim is to provide products, services and
solutions of the highest quality and deliver more
value to our customers that earns their respect
and loyalty,” is the message on hp ’s websites
worldwide. To this end, hp has an abundance
of products and services from desktops and
workstations, notebooks and tablet pcs, digital
cameras and printers, handheld devices, monitors
and projectors all the way to the industry’s most
comprehensive service packages, server portfolio,
and storage solutions as well as financial services
and training.
Non-Food Tracking
GfK SPECIAL
Cutting edge hp home
printers – top quality
technology that is easy
to use
Innovations still set us apart
hp
“You would actually have to merge eds, Dell,
sun and Sony to be this broadly based,” says
Rorsted. “This creates challenges but also
opportunities. I say opportunities because we
have a lot to offer and because this broad range
guarantees widespread brand awareness.” At
the same time, the emea boss of hp makes no
secret of his dislike of the widely held theory
that most products these days are largely interchangeable from a technological point of view
and could be sold purely by means of brand
image and services. “We are a technology-based
company and have a fundamental belief that
it is still possible to set yourself apart through
technological innovation.” Rorsted is firmly
convinced that customers will be prepared to
pay for innovations in the future.
Manufacturer of technological solutions for individual
users, companies and organizations worldwide. The
offering ranges from it infrastructures to personal
computers and peripherals and it services.
With 142,000 employees in more than 170 countries,
hp generated sales totalling usd 73 billion in 2003.
Established in 1939 by William R. Hewlett and David
Packard, who studied together at Stanford University,
the first ever hp product was an audio device.
Mission statement:
To invent technologies and services that drive business
value, create social benefit and improve the lives of
customers – with a focus on affecting the greatest number
of people possible.
Market positioning:
According to Fortune, hp is No. 14 of the top global
hp invested nearly usd 4 billion in research and
development in 2003, a clear link to how it
achieved such rapid patent growth worldwide last
year. This also attests to the uninterrupted vitality
of the company founded in 1939 by William R.
Hewlett and David Packard in Palo Alto, California.
Writing history, the two Stanford graduates set companies.
hp products are used by over one billion people worldwide.
hp is the market leader in it technology for end consumers
and smes. The company is also a leading provider of
it solutions for companies.
47
Customized mainframe computers and servers for clients in the telecoms sector,
stock exchanges and commodities exchanges and credit card providers
the standards that still apply in the it sector today.
They built their first product in a disused garage –
an electronic test instrument used by sound
engineers. A fitting backdrop to the tale: among
the first customers for the audio oscillator was
no less than Walt Disney Studios, which wanted
to develop and test an innovative sound system
for the film “Fantasia”.
From its humble beginnings in a Palo Alto garage,
hp became a major global player, taking a big step
forward in 2002 when it merged with the Compaq
Computer Corporation. From its foundation in
1982, Compaq had risen rapidly to become an
innovative supplier with a philosophy similar to
that of hp. Today, hp is the number 1 consumer
it company in the world, the number 1 technology
supplier to small and medium-size businesses,
and a leader in enterprise computing, with market
leadership positions in virtually every technology
category and region in which they compete. For
the fiscal year ended October 31, 2003 hp revenues
totalled usd 73.1 billion. hp ended the year with
approximately 142,000 employees worldwide and
operations in more than 170 countries.
Meeting all customer requirements
Trust, teamwork and flat hierarchies were taken
as basics by hp from its founding fathers Hewlett
and Packard, and developed into the company’s
current worldwide corporate strategy:
hp ’s strategy is to offer a portfolio of products,
services and solutions that are high tech, low
cost and deliver the best customer experience.
This strategy takes advantage of hp ’s unique
market positions and portfolio, differentiates them
from competitors and enables them to compete
and win in the marketplace today and in the
future. Balanced delivery across all elements of
hp’s strategy – high tech, low cost, best customer
experience – is vital to hp and they believe this
puts them in a position that no company can
match.
Aldo de Smedt,
Product Manager Europe Office Equipment, GfK Benelux
Marketing Services, manages the hp account. The company
requires information services relating to it consumer
markets in 18 countries.
48
As a result of this strategy, hp offers a value
proposition to customers that is compelling and
differentiated: hp delivers more. Innovation at a
price customers can afford, delivered with an
experience that sets them apart. “Delivering more”
means hp customers don’t have to compromise.
Non-Food Tracking
GfK SPECIAL
»Our aim is to provide products and services of the
highest quality to our customers that earn their
respect and loyalty.«
Technology is so vital to their business and
personal lives that they demand and expect much
more from their technology and their technology
partners. hp believes customers want innovation
and price, functionality and simplicity, stability and
agility, security and connection, and affordability
and high customer satisfaction.
transactions and is the world-leading technology
supplier to private customers and small and
medium-sized companies, then people still have
a whole lot to learn about hp,” said Allison Johnson,
Senior Vice President, HP Global Brand and
Communications, commenting on the start of the
campaign.
With its award-winning global brand campaign,
“Everything is possible”, which was launched
in November 2002, hp showed how the corporate
strategy is put into practice. For example, ads
illustrate how the company helps animators at
DreamWorks to create a new animation generation, how FedEx makes use of the company’s
products to deliver packages on time and overnight, and how birdwatchers in Finland log the
gps position of rare birds – all thanks to hp.
In 2003, the company introduced the “you+hp”
consumer campaign, and in March 2004 the
"change+hp” campaign showcasing hp enterprise customers who use technology to master
change.
“Nowadays most people think of hp as a large
printer and pc company. We are certainly
proud to occupy a leading position in these fields
but when you consider that hp equips over 100
shares and commodities markets and supports
95 per cent of all securities transactions worldwide, processes two thirds of all credit card
Information technology remains
extremely innovative
Whether advertising campaigns or technological
developments, software architecture or services,
any company that wishes to be a leader in
information technology first needs an extremely
large amount of information in order to be able to
offer its customers useful solutions. “In other
words, to find an answer to the question: ‘how
can we make it as easy as possible for people to
use our devices and our products?’”, says Kasper
Rorsted. The future is now:
hp invests billions
of us dollars in r&d
and filed four
thousand patent
applications in 2003
alone.
49
Mobile digital
technology is
increasingly
becoming part of
our life ...
»When it comes to understanding the markets, we leave
no stone unturned. This is why we have a huge market
research department at global and regional level.«
Rorsted continues: “We make extensive use of
GfK as a source of mediation and information.”
Aldo de Smedt, Commercial Director and Product
Manager of Europe Office Equipment, GfK Brussels, adds “hp has been a client of ours for around
15 years in 18 countries around the world; in all
areas in which our client operates, in fact.” He
is proud that hp uses the trends identified by
GfK to help make decisions about product lines
and distribution channels.
“When it comes to understanding the markets,
we leave no stone unturned,” says Rorsted.
“This is why we have a huge market research
department at global and regional level.” It must
be so, he says, because information technology
is extremely innovative, and that will remain true
for the next 20 to 30 years. “There are still a lot
of unexplored opportunities in this area. I think
that in many ways we have only just begun. The
world is becoming more and more complex.
Our products and services should help people
appreciate and take advantage of the growing
number of it product functions by improving ease
of use. hp achieves this with innovative products
that become ever simpler and more intuitive.”
And, muses Rorsted, to play a part in ending the
discrepancy between the breathtaking developments of the modern age and the worldwide
conflicts that belong in the Middle Ages, not
least through the opportunities for progress that
information technology offers.
He is equally sure that young people will naturally
learn to deal with the information overload, selecting only what is relevant to their personal and professional development. GfK Benelux Marketing Services bv Division
Belgium
Provides information services on consumer technology
products, which are based on continuous surveys of retail
sales figures; part of the Non-Food Tracking division.
Established in 1978
Major clients: Akzo Nobel, Bosch, Compaq, Gillette, hp,
Kodak, Matsushita, Microsoft, Philips, Samsung, Sony
Major markets: consumer electronics, it, household
appliances, photographic, telecoms and business
communications
Employees: 93
. . . at work and
at home
50
Non-Food Tracking
GfK SPECIAL
Non-Food Tracking:
Specializing in dynamic consumer technology
markets worldwide
Market positioning
The Non-Food Tracking division
is the market leader in Europe,
Asia and the Pacific, the Middle
East and, in conjunction with
our us partner, npd Intellect, in
the usa.
Our key services
We provide our clients from
retail and industry with comprehensive retail information
on the innovative consumer
technology markets, which are
marked by rapid technological
advances, and support them
in their sales, marketing and
logistics operations and strategy.
In detail
Our clients receive regular
information based on continuous
surveys and analyses of sales
development and productrelated characteristics for
consumer durables at the point
of sale. In addition, we offer
special analyses, in particular of
new products and new markets.
We work with all the major
retailers in 48 countries worldwide, who supply most of the
sales information that we analyze
in electronic form. We also collate
and categorize all the marketrelevant product and technical
features of the various consumer
technology models and items
and combine them with the salesrelated information taken from
retailers using our database
system.
We track the following markets:
consumer electronics, it (hardware and software), telecommunications, household appliances,
photographic, optical and lighting, diy and building materials,
healthcare and medical devices,
toys, sports and leather goods
as well as entertainment (books,
cds, dvds, films, games and
videos).
We also offer encodex, our
software and item catalogue,
which is a b2b platform for
e-commerce activities in retail
and industry.
Acquiring Informark in
Australia and Amar in the
Czech Republic as part of
our strategy to expand our
market positioning in Asia
and the Pacific as well as
Central and Eastern Europe.
Offering new services, in
particular the regular
information services on shelf
displays and prices in the
retail consumer technology
segment provided by ifr,
in which GfK has a majority
stake.
Publishing the encodex New
Product Guide, which retailers
use when designing and
printing price posters and
other means for promoting
sales and continuing the
implementation of the
startrack production and
analysis system by publishing
the Weekly Warning Index.
Developing a forecasting tool
for the mobile phones capital
market The benefits
Our clients in retail and industry
have direct access to databases and also receive regular,
standardized analyses which are
used to track and manage short,
medium and long-term planning
on product and pricing policies,
advertising, distribution, sales
and logistics.
Our clients
Our clients comprise manufacturers in the consumer
technology sector such as multinationals and companies operating at regional and national level,
as well as retailers. Our top
clients include Bosch Siemens,
Canon, Carrefour, Electrolux,
Hewlett Packard, Matsushita,
Metro, Nokia, Philips, Samsung,
Sony and Whirlpool.
Focus for 2003
Acquiring the majority
stake in the retail research
business of media control
GfK International, Germany,
with a view to strengthening
our position in the entertainment segment.
51
52
Media
GfK SPECIAL
Cutting through
The hard facts about selling magazines successfully
53
The hard facts about selling magazines successfully:
Cutting through
Budapest-based Sanoma, a Finnish-Hungarian publishing house, combines comprehensive market
and media research to ensure its survival in the fast-growing Hungarian media market. A successful
strategy – on the strength of its general interest magazines, Sanoma has gained a market share of
over 30 per cent in Hungary.
Ildikó Csejtei sees herself in a pioneering role.
“We are trailblazers in our home market,”
emphasizes the Marketing and pr Director of
media company Sanoma Budapest Kiadói Rt., full
of praise for her team: “Our market researchers
are professionals who know their stuff. They don’t
just ‘order’ market research from a company, but
instead work closely with the research company as
a competent business partner.” And accordingly,
the company’s team of researchers works very
closely with GfK Hungaria in Budapest. Ildikó
Csejtei has a huge requirement for market and
media research. As Hungary’s third-largest media
company, Sanoma has a share of 32 per cent in
the country’s magazines market, sales of around
eur 64 million, over 400 employees and faces
fierce competition. The main competitors are
Germany’s Axel Springer Verlag and the SwissHungarian Group, Néppszabadság/Ringier.
Another competitor from Germany is the waz
Group from Essen, which has five regional daily
papers (circulation: 225,000) in four of the 19
Hungarian administrative districts.
Ildikó Csejtei,
Marketing Director responsible for marketing, pr and
strategic market research at Sanoma Budapest:
“Market research is largely perceived as one of the core
competences of a company.”
The traditionally difficult print media market is
dominated by Springer and Sanoma. However,
the biggest media companies are rtl with sales
totalling eur 98 million and the Swedish pe 2
Group whose sales amount to around eur 64
A typical day in the
editor’s office of
Sanoma’s flagship
financial magazine,
Figyelo, which is
Hungary’s answer to
Business Week
54
Media
GfK SPECIAL
Sanoma’s top women’s
magazine, nök lapja,
is popular with women
of all ages and from all
walks of life
million. Unlike Germany, in Hungary the tv and
radio segments are predominantly the realm of
private stations such as rtl, tv 2 and Magyar atv
and ten private radio stations. The three public
service tv providers m1, m2 and Duna Tv and the
radio stations Kossuth, Petofi and Bartok are
less significant. These stations are directly statefunded, i.e. users do not pay a licence fee to the
provider, a system that has been the subject of
much debate.
26 titles on the market
As everywhere else, in Hungary too, competition
to win viewers, listeners, readers and advertising
clients is tough. Sanoma, which was taken over
in 1992 by Dutch media giant vnu and has been
owned by the Finnish Sanoma wsoy Corporation
since 2001, faces the challenge of selling its 26
different general interest and financial magazines
to a big enough readership in a country with a
population of just over 10 million. Competition
is especially fierce when it comes to women’s
magazines such as Nök Lapja, which according to
Ildikó Csejtei is “our flagship and a classic example
of a women’s magazine.” The same applies to the
two gossip magazines Story, with an unusually
high circulation by Hungarian standards of
400,000 copies, and Best. Market research data is
a crucial decision-making tool in their production.
The rainbow press women’s magazine Meglepetés,
which is the number 2 in this market segment,
is having to battle it out with market leader
Latkishgerjer which is published by Axel Springer.
The German publisher entered the Hungarian
market in 1988 and has since established itself
with eight regional newspapers, one Sunday paper,
a daily financial paper and 17 different magazines
ranging from tv listings to women’s mags, home/
lifestyle, food, entertainment and crosswords as
well as magazines for young people. 55
Ákos Kozák,
Managing Director of GfK Hungária, Budapest:
“We have over 1,000 titles in Hungary today – clearly a
situation that calls for efficient market and readership
research.”
In addition to original Hungarian titles, Sanoma
also publishes international magazines under
licence, such as Cosmopolitan, which has a
respectable circulation of of 40,000 and Sanoma
market researcher Ildikó Csejtei explains “after all,
this high-end magazine is sold at the same price
in Hungary as in wealthier countries like Germany
and the uk.” The prestigious lifestyle magazine
Beau Monde, which has its origins in the Netherlands, and the well-reputed National Geographic
from the usa are two of the more ambitious
licensed titles Sanoma publishes in Hungary.
Competition is equally fierce in the financial press
segment. Sanoma’s portfolio includes Figyelö,
Figyelö Trend, Figyelö top 200 and Üzlet & Siker.
These are complemented by a media trade
magazine entitled Mediafigyelö and weekly
financial events which are organized under the
Figyelö Fórum brand. Sanoma also runs Internetbased activities, including online versions of
various Sanoma magazines and Startlap Portal,
the Web network Figyelönet and Nök Lapjy-C@fé,
a portal for women. However, Sanoma does not
intend to stop there and is planning to expand
its Internet-based and print media activities
through further development and relaunches of
existing magazines and websites and by acquiring
new titles and licences. No easy feat, with over
1,000 different publications already vying for
readers’ attention in Hungary. This is where the
market and readership researchers are called in.
Akós Kozak, Managing Director of Methods at GfK
Hungaria, Budapest, says about his countrymen,
“Few people read national daily newspapers,
certainly far fewer than in the Czech Republic or
Russia. In Hungary, people prefer to read regional
daily newspapers and, more than anything else,
magazines.” Ildikó Csejtei adds, “they are very
price conscious buyers.” She complains about
the negative effects of tv on reading and readers.
Most Hungarians now prefer to watch tv, on
average for five hours a day, and the expectations
in terms of quality and content are getting lower
all the time.
Sanoma Budapest
publishes 26
magazines, most
of which are the
leading titles
in their respective
segment
56
Media
GfK SPECIAL
Budapest – worlds apart:
ultra modern and international newsagents and
old-style coffee houses
that have survived from
the days of the AustroHungarian empire
Sanoma Budapest
One of the leading media companies in Hungary,
»As in many other countries, in Hungary general interest
magazines have found ways of successfully co-existing
alongside TV.«
specializing in magazines and journals and Internet
products. The company is the market leader in this
segment.
Established in 1992 as a joint venture with vnu in the
Netherlands, the company has been part of the Finnish
publishing group Sanoma wsoy Corporation since 2001
and today trades under the name Sanoma Budapest.
Mission statement
To create and continuously develop top quality magazine
Nevertheless, Ildikó Csejtei is not concerned about
the survival of magazines in her country. As in many
other countries, in Hungary too general interest
magazines have found ways of successfully coexisting alongside tv. The magazines are filled
with news and pictures, art and culture and, above
all, celebrity gossip about tv and film stars, written
is a style that suits the target group of readers.
brands and multi-media extensions that offer sustainable
profitability and growth
To be the clear number one in the chosen markets
and become a top 3 player in the European consumer
magazine market
To offer a creative, dynamic and inspiring working
environment to the employees who are key in reaching
the company’s objectives
To create a long term shareholders’ value taking
the interests of all the company’s stakeholders into
permanent and careful consideration
Media offering and coverage
Ildikó Csejtei and her various teams play a key role.
In addition to being responsible for Sanoma’s overall marketing and pr, Ildikó Csejtei’s responsibilities
also cover the marketing and pr for the individual
magazines. This means that she decides on the
activities relating to the launch of new titles or
acquisition of existing ones as well as any necessary
editorial changes to existing magazines. Ildikó
Csejtei is also responsible for allocating the budget
and supervising market research activities, which
she says is a strategic area. “I believe that market
research is largely perceived as the centre of
competence of a company.”
The company publishes more than 20 magazines which
target consumers on the one hand and readers of the
financial press on the other. Flagship titles include women’s
In market research, everything focuses on readers,
buyers and subscribers of magazines:
magazine Nök Lapja, the rainbow press women’s magazine
Meglepetés and weekly financial magazine Figyel.
Sanoma’s range of magazines is supplemented by licensed
titles such as Cosmopolitan and National Geographic.
Who are the readers?
What do they want to read?
What defines consumer purchasing behaviour?
What prompts the purchasing decision?
Was advertising understood?
What needs to happen at the point of sale?
What PR measures are successful?
When do consumers read?
Sanoma also offers parallel Internet products and a media
portal, Startlap. In addition, the company is a major event
and conference organizer.
Sanoma has a share of 30 per cent of the print market in
Hungary, selling around ten million magazines to approx.
5.5 million people every month. Five of the most popular
women’s magazines in Hungary are published by Sanoma
Budapest.
57
»Market research helps us to define the USP of each
magazine and establish the required quality of the design
and information provided.«
Sanoma’s licensed
version of Lifestyle is
an aspirational luxury
not everyone can afford
in Hungary
58
This list is by no means exhaustive and market
researchers are constantly seeking answers to
aspects such as research, creativity, administration,
effectiveness and efficiency. In order to do this,
Ildikó Csejtei and her teams put to work all the
resources at their disposal. The market researchers
communicate with customers via external call
centres to establish customer loyalty and record
any comments and suggestions. In addition,
Sanoma’s own test shop is used to analyze the
customer-facing facts of real day-to-day sales of
magazines. The collected data is used to make
editorial improvement, develop more accurately
targeted sales campaigns and devise more efficient marketing strategies.
is pioneering an approach whereby all projects
are supported with strategic research.”
“We are constantly monitoring the market to
determine any gaps and opportunities that
would enable us to enter a wholly new market,”
summarizes Ildikó Csejtei. “Market research
helps us to define the usp of each magazine and
establish what quality is required for the design
and information provided. In this respect, research
plays a key role within our company and Sanoma
Key clients: Cereol Rt, Kentucky Fried Chicken, Kraft
People who can cut through even the deepest
jungle are trailblazers in the truest sense of the
word. GfK Hungária Piackutató Kft, Hungary
Provides information services in the Consumer Tracking,
Non-Food Tracking, Media and Ad Hoc Research
segments.
Established: in 1989 on the eve of the introduction of a
market economy in Hungary and as part of the association
with the GfK Group.
Foods Hungária, lg Electronics, Radio 1, Szonda Ipsos,
Tetra Pak Hungária, The Coca-Cola Company, Unilever,
Westel
Key markets: fmcg, household appliances, diy, media
Employees: 59
Media
GfK SPECIAL
Media division:
Providing the technology and expertise for analyzing
media consumption
Market positioning
We are the global leader in
innovative electronic metering
technology in quantitative tv
and radio reach research, the
European market leader in
quantitative tv research (reach
research). We are also the No. 1
in media research in Austria,
Germany, the Netherlands,
Switzerland and the Ukraine.
Our key services
We offer information services
on media consumer behaviour
and attitudes. Services include
quantitative analyses of viewer,
reader and listener reach and
qualitative surveys on acceptance,
preference and recall of media
content.
In addition to the classic media
like print, radio, tv and outdoor
advertising, we also survey
the new media which have
become established thanks to
the Internet, global networking
and digitization.
In addition, we offer hardware
and software for use in media
research for measuring, data
processing and analysis. This
includes Telecontrol tv metering
equipment, the Radiocontrol
watch and, the latest innovation
developed by the GfK Group,
MediaWatch, a multimedia
metering device used to measure
the reach of tv, radio, cinema,
outdoor advertising and print
media. The pc#tv software
enables clients to analyze tv
consumption.
Electronic, daily updated
information on tv ratings in
seven European countries
Regular surveying of the
print, radio, tv, outdoor
advertising and Internet
sectors in 20 countries
throughout Europe
Continuous electronic radio
research using Radiocontrol
technology in two European
countries
Special ad hoc surveys of
attitudes, acceptance and
preferences relating to media
and media content
Establishment and launch of
a tv panel comprising 1,200
households in the Ukraine.
The contract runs over four
years and includes equipping
the tv panel with tv meters
developed by GfK subsidiary
Telecontrol in Switzerland.
Extension of current contract
with agf (Television Research
Partnership) to the end of
2004 for measuring tv ratings
in Germany. The increasing
use of digital tv has resulted
in a requirement for differentiated channel identification in
this area as well. For this, agf
and GfK Fernsehforschung
use the existing Telecontrol
xl metering technology in
conjunction with set-top
boxes with integrating metering software.
Delivery of tv meters of the
Telecontrol vii and Telecontrol viii series to licencees
in Puerto Rico and India.
Pilot projects using
Radiocontrol technology in
Spain on behalf of the aimc
media research committee,
in Japan on behalf of
VideoResearch Inc. and in
Germany.
Three-month pilot project
with the Radiocontrol watch
in London for rajar, the
association of British radio
stations which measures
radio reach.
Launch of a national radio
research panel for The
Wireless Group, on the basis
of which GfK Media u.k. has
been measuring radio reach
throughout the uk since
March 2003, using
Radiocontrol technology.
Multi-annual contract award
for readership research won
in Hungary.
The benefits
Media reach is the currency for
tv and radio programmes, as
well as for newspapers and
magazines. Media companies
use it as the basis for price
structures for online and printed
media, and advertising and other
agencies use it as the basis for
their media planning. In addition
to this, information obtained
from media research is used to
help shape programmes and
media content.
In detail
Focus for 2003
Our clients
On the one hand, these comprise TV and radio stations and
their existing clients in several
countries, as well as media
companies in the print and Internet sectors and on the other, the
advertising industry and media
agencies. Major clients include
working groups such as agf
(Television Research Partnership) and agma (Media Analysis
Partnership) in Germany, sko,
pre and stir in the Netherlands,
sic in the Ukraine, cim in
Belgium and Mediametrie in
France, major radio and tv
stations, agencies and media
companies such as orf (Austrian
radio and tv) in Austria and srg
(Swiss radio and tv) in Switzerland, bbc World, cnbc, bmg and
Endemol, along with many
publishers.
59
60
Ad Hoc Research
GfK SPECIAL
with new ideas
Market research to support McDonald’s, the biggest global operator in the
restaurant sector, with their new brand image
61
Market research to support McDonald’s, the biggest global operator
in the restaurant sector, with their new brand image
with new ideas
Eating habits change and young people have different ideas on what they want from “their”
restaurants and so McDonald’s is tailoring its brand image to suit the current needs of its
customers. A different, more contemporary design for restaurant interiors, trendy up-to-date
uniforms, more extensive menus and an ad campaign under the banner “I’m lovin’ itTM ” are
on course to continue the Group’s extraordinary success story. Market research made a major
contribution to the new direction.
As Jim Cantalupo, Chairman and Chief Executive
Officer of McDonald’s, the biggest restaurant chain
in the world, puts it: “The world has changed.
Our guests have changed. And we need to change.”
He is throwing his energy into converting words
into deeds with the new global strategy, the “plan
to win”.
Pulsating hip hop type music, visuals with broad
emotional appeal depicting exciting snapshots
of life and the slogan “I’m lovin’ it” are heralding
McDonald’s change from fast food restaurant to
lifestyle choice.
Johan J. Jervoe, Vice President of Marketing,
Research and Menu Management for McDonald’s
Germany says at the start of the campaign that
these three words are more than just a claim,
rather a complete philosophy and consequently
the intellectual core of the Group’s global
operations. Adriaan Hendrikx, Managing Director
of McDonald’s Germany, adds: “We wanted a
clear message which touches everybody, which
everyone can identify with and which people
anywhere in the world can understand.”
Sabine Ullrich, Director of Strategic Planning &
Research for McDonald’s Germany, formulates it
accordingly: “Our target group is young people of
all ages. We unite everybody, whether they
are the kids themselves, or the grandparents
who are taking them there, or, indeed, the whole
family.”
The McDonald’s success story:
identifying and using the signs of the times
Sabine Ullrich,
Director of Strategic Planning & Research for
McDonald’s Germany: “Without a doubt, a factor in
our success is the autonomy of our managers in the
different countries, although of course, they mustn’t
lose sight of the corporate philosophy and overall
strategy.”
62
The basis of the McDonald’s management decision
taken at the company headquarters in Oak Brook,
USA, and by branches all over the world was the
reality that sales were not growing and profits
were not rolling in as they used to and the fact
that consumers were looking for more balanced
food. Sabine Ullrich reports that: “The Big Mac
etc. will remain the major staple of our menu,
but there will be product extensions like good
quality salads, organic milk or fruit boxes for
kids.” She goes on to explain how the “plan to
win” and the “Five Ps” work to increase customer
Ad Hoc Research
GfK SPECIAL
One of the McDonald’s
flagship locations:
the 42nd Street outlet
in New York, designed
to look like a Broadway
theatre.
»We need to change,” said McDonald’s Chairman
Jim Cantalupo eighteen months ago. Customers have
caught on: they’re lovin’ it.«
satisfaction, so that the kids and the young at
heart will identify even more strongly with the
world of McDonald’s. The Five Ps: “People,
Products, Place, Price and Promotions” all have
to be right.
uniforms show that the new campaign is far more
than just a new slogan. In terms of pricing, too,
McDonald’s has shown that it offers something
for everyone. The McDeal concept is consistently
tailored to suit the smaller purse.
“People” means employees, who do their utmost
to ensure that customers feel at home. It also
includes self-motivation and enjoying their work.
“Products” reflects the continuous improvement
and upholding of the self-imposed quality targets
for existing products and the expansion of the
product range. “Place” signifies cleanliness, a
pleasant atmosphere and innovative restaurant
interior design. “Promotions” mean leadership
in marketing and also open and transparent
communication of the corporate philosophy to
the public and within the company. The company
has also demonstrated its innovative approach in
its new brand campaign, “I’m lovin’ it”. However,
new offerings, such as the deluxe lines have
provided another advance taste of the new variety
of products on offer. New restaurant design and
This heralds a new era in the history of McDonald’s,
which was started in 1948 by Richard and Maurice
McDonald with their fast food restaurant in San
Bernadino, California and which began its journey
A new
restaurant
design
accompanies
the new
“I’m lovin’ it”
brand slogan
63
McDonald’s is a
classic kids’ birthday
venue, with the
Ronald McDonald
clown attaining
cult status for many
youngsters and
young at heart
to global empire with a small step in 1953, when
Neil Fox became the first franchisee in Phoenix,
Arizona. However, major success only followed
with Ray Kroc, who bought the sole rights to
the McDonald’s system in 1961, having already
acquired the exclusive rights to grant licences in
1954.
Jürgen Hofmann,
Research Manager Brand and Image Research/
Communication Research for GfK Marktforschung,
has been on the development team of the new
“I’m lovin’ it” brand campaign in Germany from the
start.
64
The brand has gained a place among the topranked brands for some time, being currently
ranked No. 8 with a book value of approx.
usd 25 billion. Coca-Cola remains in pole position,
(usd 70 billion +), followed by Microsoft
(usd 65 billion+) and ibm (usd 51.77 billion).
McDonald’s launched in Germany in 1971, since
which time they first broke through the billion
deutschmark sales barrier in 1989 and opened
their thousandth German restaurant in Berlin in
1999. At the end of 2003, more than 740 million
customers accounted for net sales of around
eur 2.27 billion, with an average staff complement
for the year of 47,000. McDonald’s is present
in 119 countries worldwide and has more than
31,000 restaurants, which are visited by 47 million
customers every day. Total sales for 2003 amounted
to usd 45.9 billion, which represents an increase of
10.6 per cent on the previous year.
Without a doubt, one of the secrets of McDonald’s
success is the autonomy which the corporate
headquarters gives its managers in the different
countries. They are free to adapt their operations
to the habits and attitudes of the local population
and to respond to competition with flexibility, although of course, they must not lose sight of the
corporate philosophy and overall strategy.
Ad Hoc Research
GfK SPECIAL
»Our target group is young people of all ages. We unite everybody,
whether they are the kids themselves, or the grandparents who are
taking them there, or, indeed, the whole family.«
Market research to identify opportunities and
their optimum exploitation
An important aid to decision-making processes
such as those currently taking place at McDonald’s
is provided by market researchers, including GfK
for the German market. GfK has been carrying
out fast track daily consumer surveys since 1985.
Those surveyed are in the 14 – 49 age group
and they are asked about their attitudes, their
advertising recall, their opinions on image and
their impressions of their most recent visit to what
is popularly known as the “home from home for
fast food”. In addition, consumers are also asked
about their opinions on the latest McDonald’s
promotions. As Jürgen Hofmann, Research
Manager Brand and Image Research/Communication Research at GfK, reports: “Fast track
surveys are real currency at McDonald’s, since
they not only impact on advertising decisionmaking, but by quantifying customer satisfaction
levels, they can also be used as a controlling
instrument.” Hofmann’s remit includes monthly
reporting updates and quarterly reports by
individual market as well as an annual summary.
GfK and other institutes also carry out additional
important ad hoc surveys. In this way, GfK
researchers support management decisions at
McDonald’s. It was also Hofmann who, two years
ago, on the basis of fast track data, contributed
to McDonald’s decision to rethink their national
brand image.
McDonald’s Corporation
The leading fast food restaurant chain in the world
Established in 1954 by Raymond Albert Croc, who
originally joined brothers A. Richard and Maurice
McDonald as a partner in their successful fast food
restaurant in San Bernerdino, California.
Mission
To be our customers’ favorite place and way to eat.
To leverage the unique talents, strengths and assets
of our diversity in order to be the world’s best quick
service restaurant experience.
Market position
Global brand leader in the fast food sector and ranked
No. 8 most valuable brand in the world. Every day,
around 47 million customers visit one of the 31,000
restaurants in 119 countries.
In 2002, McDonald’s sales totalled more than usd 41
billion with a staff complement of more than 1.5 million
employees.
“I’m lovin’ it” in many world languages
Group headquarters commissioned its 14 biggest
ad agencies throughout the world to come up
with a unique and internationally translatable
campaign and to resolve the question of “what it
is that links McDonald’s consumers all over the
world and what it is that attracts them,” as Sabine
Ullrich explains. The creative package from
Heye & Partners, Unterhaching near Munich, Service quality
and good value
prices are also
important success
factors
65
Consistently high
product quality
and the most
stringent cleanliness standards
are all part of the
McDonald’s recipe
for success
McDonald’s ad agency in Germany for 32 years,
came up with the basis for the McDonald’s global
campaign. But Sabine Ullrich insists that: “Now
there is an overall framework which prescribes
what is mandatory in commercials, but which also
says what is open to adaptation to national or even
local linguistic and cultural characteristics.” The
process already starts with the claim made in the
»An important aid to decision-making processes
such as those currently taking place at McDonald’s
is provided by market researchers, including GfK
for the German market.«
English version, “I’m lovin’ it”, but which can be
translated into different languages any time if
the management and national ad agency of the
country concerned thinks this is the right course
of action. In Germany, a deliberate decision was
made in favour of a German-language version:
“ich liebe es” and this is what the tv spots, ads,
flyers and the new website all carry.
Even the music is tailored to different national
tastes, although it will not deviate from the
creative line of depicting McDonald’s as a lifestyle
company which is youthful, dynamic, vivacious
and full of fun.
On 2 September 2003, the campaign was launched
on air in Germany, to put it into the media vernacular.
And Lady Luck did not desert McDonald’s: as early
as two months after launch, 57 per cent of
consumers in the 14 – 49 age group surveyed by
GfK recalled the campaign when prompted
and similarly, 76 per cent recalled it after four
months. Accordingly, the man holding the fort in
Germany, Adriaan Hendrikx, is going into the
company’s 33rd financial year with dynamism
and confidence. “We need to change,” said
McDonald’s Chairman, Jim Cantalupo, eighteen
months ago. Customers have caught on:
they’re lovin’ it. GfK Marktforschung, Germany
Provider of information and consultancy services for new
product development, positioning and management of
product and service offerings, for market mix optimization
and for corporate brand management and customer loyalty
management.
Established: 1984
Key clients: BMW, DaimlerChrysler, Deutsche Telekom,
enbw, Kraft Foods, L’Oréal, McDonald’s, Procter&Gamble,
Renault/Nissan, Siemens, SmithKlineBeecham, unicef,
Wrigley
Key markets: Automotive, finance and equities, energy,
fast moving consumer goods, it, retail, telecommunications, textiles and fashion.
Employees: 271
66
Ad Hoc Research
GfK SPECIAL
Ad Hoc Research division:
Identifying, maintaining and increasing the market potential
of our clients
Market positioning
GfK Ad Hoc Research is one of
the world’s leading suppliers of
information services, particularly
in product development and
brand and communication
research. The division offers
advice and support on customer
satisfaction programmes. In
terms of business volume,
GfK Ad Hoc Research is ranked
No. 7 in the world and No. 5 in
Europe.
Our key service sectors
comprise surveys on
Market segmentation and
evaluation
Market positioning
Concept and product research
Packaging optimization and
price optimization
Advertising media optimization
Test market research and
forecasting
Brand and campaign management
Our key services
In Ad Hoc Research, we offer
our clients tailor-made information services for segmenting,
developing, positioning and
maintaining products and
services, aimed at optimizing
the mix of marketing policy
activities and managing product
and corporate brands, as well as
implementing customer loyalty
programmes.
In detail
We offer a modular system of
instruments and tailor-made
solutions for every phase in the
brand, product and service
lifecycle. The system relates
mainly to services where data
is gathered through surveys
and tests. Clients can opt to take
up the entire service spectrum,
or just individual modules.
All these services are offered by
GfK subsidiaries in 28 countries
in Europe and the USA, as well
as cooperation partners in a
further 63 countries worldwide.
Our clients
Clients are companies from
the branded goods industry,
retail and the service sector,
as well as advertising agencies
and other service providers
in the communications sector.
Major clients include
Procter& Gamble, Kraft Foods,
Coca-Cola, DaimlerChrysler,
Capital One, Bank of America,
L’Oréal, Wrigley, Tyson, bmw
and Deutsche Telekom.
Focus for 2003
Significant improvement in
sales
Turnaround of GfK-cbi’s ad
hoc business in Italy and a
clear improvement in our ad
hoc research in the uk
Selling off the loss-making
Borell in Sweden
Successful development in
difficult markets such as
Germany, Turkey and Central
and Eastern Europe
Implementation of a key
account management system
International client conference
on brand and communication
research in Paris
At the esomar Conference
2003 in Prague, the GfK
contribution on “Brand
controlling” was awarded
best methodological paper
Customer loyalty research
Many of the instruments used
for ad hoc research have been
maintained and developed for
decades. This has given GfK
databases, containing numerous
surveys and tests which have
already been carried out, to
serve as benchmarks for new
surveys.
In addition, we also offer ad hoc
research services for highly
complex modern markets in the
business-to-business, financial
services, energy, automotive,
telecommunications, capital
goods, logistics, FMCG and
textiles sectors.
The benefits
Clients use these services as a
basis for minimizing the risk
relating to short, medium and
long term marketing decisions
and to increase their market
success potential in the long
term. Surveys carried out extend
from initial business or product
ideas and pre-launch preparation
to subsequent marketing and
communication activities.
67
68
HealthCare
GfK SPECIAL
Spotlight on the healthcare
system and the interests of
doctors and patients
Pfizer ensuring the success of the company by consistent quality,
innovation and market analysis
69
Pfizer ensuring the success of the company by consistent quality,
innovation and market analysis
Spotlight on the healthcare system and
the interests of doctors and patients
Whilst the global healthcare market is expanding, and with a growth rate of five to seven
per cent per annum offers good business potential, the segment remains primarily difficult
and fiercely competitive. For Pfizer, global brand leaders in human medicine, this means
the rigorous application of the corporate philosophy and exploiting its market opportunities
with the aid of every available marketing tool.
Walter Köbele, Chairman of the Management
Board of Pfizer Germany in Karlsruhe insists: “We
aim to make a contribution to ensuring that human
beings can grow old in good health.” However,
this is only a part of his vision of the future. In the
longer term, the company hopes to “eliminate the
fear of becoming ill”. And according to Köbele, this
applies equally to major threats like cancer, Aids
and Alzheimer’s, as it does to high blood pressure
or – mega male worry – erectile dysfunction.
»In the longer term, we want to eliminate the fear
people have of becoming ill. This applies to major
threats like cancer, Aids, Alzheimer’s, as
it does to high blood pressure or – mega male
worry – erectile dysfunction«
contribute eur 68 million, with veterinary
medicine accounting for eur 73 million. The merger
with Pharmacia has allowed Pfizer to continue
consolidating its competence in its existing fields
and to expand into new areas like ophthalmology,
endocrinology and metabolics as well as oncology.
The Pfizer Group currently has a total of 6,000
employees.
Walter Köbele reports that: “It all started from
modest origins with an anti-parasite treatment.”
In the mid-nineteenth century, parasites were a
major problem in the usa.
For this reason, Pfizer has taken a firm foothold
all over the world, including Germany and where
necessary, filled any gaps in expertise by acquiring
companies, especially recently. In Germany alone,
the Pfizer Group includes distinguished companies
like Pfizer Germany, Gödeke, Parke-Davis, Pfizer
Consumer Healthcare, Pharmacia and Heumann
Pharma.
The start was a pleasant-tasting anti-parasite
treatment
Walter Köbele,
Chairman of the Management Board of Pfizer Germany:
The pharmaceutical division accounts for eur 1.9
billion out of Pfizer’s total sales in Germany,
which amounts to eur 1.7 billion. Consumer
healthcare brands like Olynth, Listerine, Hexoral,
Yxin and chemists’ cosmetic line, Claire Fisher,
70
“Our characteristic hallmarks are our values. Right
at the top is quality, along with innovation, customer
use, teamwork, mutual respect, performance, integrity
and a sense of common purpose.”
HealthCare
GfK SPECIAL
Technology in the
service of health.
A fully-automated
production line seals
products in foil, packs
them and bundles
them into units ready
for delivery
Cousins, Karl Christian Friedrich Pfizer, a chemist
and Karl F. Erhart, a master patissier, immigrants
from Ludgwigsburg in Germany, founded the
chemicals company, Pfizer and Co. in New York in
1848. Their first product was a pleasant tasting
and therefore successful anti-parasite treatment.
All the rest tasted so bitter that children would
resolutely refuse to take them, despite the efforts
of their parents. And this is where the patisserie
talents of Karl F. Erhart ensured that help was at
hand. However, the core of the business was
supplying raw chemicals to the pharmaceutical
and food industries. From the outset, the founders
had already identified two corporate aims, which
still today form the basis of the healthcare group:
the quality and innovation appreciated by customers.
Only a complex management structure can
ensure success
The major breakthrough came in 1944, when
Pfizer – a joint stock company since 1900 – started
mass-producing penicillin, ultimately accounting
for more than half the penicillin produced worldwide. In 1951, the company then finally went
global, establishing its own subsidiaries at home
and abroad and acquiring major, predominantly
European, pharmaceutical companies. Today,
Pfizer’s global sales total approx. usd 45 billion
and its staff complement is 120,000 employees
in more than 80 countries, of whom 12,500 are
engaged in scientific research and development
work. With an annual budget provision of usd 7.9
billion, researchers have at their disposal the 71
Peter Eichhorn,
Managing Director of GfK HealthCare Germany:
“Our service package encompasses product-specific
market research. We also supply information on
issues relating to health policy and other data used
for the operational management of pharmaceutical
businesses.”
biggest budget in the biomed sector anywhere in
the world, which is used for around 200 research
projects and work on more than 100 new medical
products. Pfizer products are sold in almost 150
countries.
Köbele comments: “Our characteristic hallmarks
are our values. Right at the top is quality,
along with innovation, customer use, team work,
mutual respect, performance, integrity and a sense
of common purpose.” This also requires the
establishment and coordination of an extremely
complex management structure, from marketing
to sales, from r&d to contract management . . . and
there is scarcely another market as difficult as
pharmaceuticals. It begins with the statutory drug
regulations for product approval and extends to
the treatment and prescribing habits of doctors,
the role and organization of chemists and the
attitudes and behaviour of patients. And it is the
patients who are becoming increasingly crucial
to the decision-making process. As Köbele
comments: “Patients want more information and
they want to have a say in what happens to them.
So they will have to take on more responsibility
for themselves.”
Market research minimizes the
corporate risk
All in all, the financial risks which pharmaceutical
manufacturers shoulder are great, however,
equally great is the need for relevant, reliable,
country-specific and at the same time internationally comparative data and information required
to manage the business. Top quality, up-to-date
and precise intelligence on the most varied
individual issues is essential. This is a task which
Pfizer and others repeatedly continue to resolve
in cooperation with the GfK Group.
Precision, quality
and hygiene are the
watchwords … and
this means quality
controls at every
stage of the production
process
72
HealthCare
GfK SPECIAL
Pfizer: everybody in the
world should be able to
grow old in good health.
Above all, Köbele and his management team
lend growing importance to primary market
research, which is continuous data gathering on
consumer behaviour and attitudes and people
who work in the healthcare sector. Accordingly,
the collaboration has continued to develop
over the years. Peter Eichhorn, Managing
Director of GfK HealthCare Germany, reports:
“The main focus of the service package evidently
concentrates on product-specific market research.
In addition, GfK HealthCare supplies information
on issues relating to health policy and other
data required for operational management of
pharmaceutical businesses.”
Here, Eichhorn includes projects which come
under the heading of “Best Field Force”, which
provide information on the levels of satisfaction
of the Pfizer field force with the equipment
and materials provided to them and their work
with other Pfizer departments. GfK has also
been commissioned by Pfizer to carry out basic
surveys on healthcare supply, infrastructure and
reforms.
This includes marketing issues. On the one
hand, there are surveys which deal with market
potential and on the other, there are tracking
studies, which check and analyze the success
of marketing concepts on a continuous basis.
The focus here is on erectile dysfunction, antibiotics, mycology, thrombosis treatments, calcium
antagonists, all of which are handled by GfK
HealthCare for Pfizer.
In the self-medicating sector, GfK supplies Pfizer
Consumer Healthcare with GPI advertising statistics on “public health media” with the software,
as well as GPI advertising statistics on “chemists”
and the M.I.X. GPI advertising index, including the
software. The Pfizer veterinary division is supplied
with the Veterinarian Report by GfK, together with
ProVil, the associated software.
The stakeholder’s best partner is also the
shareholder’s best partner
Pfizer boss, Köbele, knows why market research
is so important to him: “Markets are becoming
increasingly complex and so looking after stakeholders is following suit. We not only have to Pfizer
Pfizer, which took over Pharmacia in 2003, is the global
leader in pharmaceutical manufacturing.
Established in 1848 by two cousins emigrating from
Germany, Karl Christian Friedrich Pfizer and Karl F. Erhart,
Pfizer & Co. initially produced raw chemicals for the
pharmaceutical and food industries.
Mission statement and corporate undertaking
We will become the world’s most valued company to
patients, customers, colleagues, investors, business
partners and the communities where we work and live.
We dedicate ourselves to humanity’s quest for longer,
healthier, happier lives through innovation in pharmaceutical, consumer and animal health products.
Market position and offering
According to Fortune, with 14 leading medical products,
Pfizer is ranked No. 1 pharma company in the world.
In 2003, the Group achieved results of around usd 45
billion with a staff complement of approx. 120,000
employees working in over 80 countries.
Almost 170 million people all over the world took a
Pfizer or Pharmacia product in 2003.
73
In addition to medical products for humans, Pfizer manufactures healthcare
and veterinary products.
»Markets are becoming increasingly complex and
so looking after stakeholders is following suit. We
not only have to convince doctors, but must also
be aware of the politicians’ views and the situation
of the health services, not to mention maintaining
an appropriate relationship with patients.«
GfK HealthCare, Germany
Provider of information and consultancy services for
successful product development, launch and marketing of
products and services, customer loyalty enhancement,
brand analysis, price determination and positioning, part
of the HealthCare division.
Established in 2002
convince doctors, but also the politicians, who are
aware of the agendas of the health services and
ultimately, we also have to maintain an appropriate
relationship with patients, who are becoming ever
more vociferous.”
This statement leads Köbele directly to one of
Pfizer’s corporate aims: “If we are the stakeholders’ best and most valuable partner, then
the same applies for our shareholders.” Key markets: products for dental medicine and dental
labs, public healthcare, insurance, the Association
of Medical Technology, food and food epidemiology,
prescription medications, otc products, veterinary
medicine.
Staff complement: 58
In 30 years’ time, one
German in two will
be older than 60.
That is the healthcare
challenge.
74
HealthCare
GfK SPECIAL
HealthCare division:
Using local competence to exploit global market
opportunities
Market positioning
The newly established HealthCare
division ranks GfK among the
three leading providers of ad
hoc information services in
global pharma market research.
We are No.1 in Germany for
our doctors’, chemists’ and consumer-related panel research
in communication research and
for our information services for
dental and veterinary medicine
sales data we are also ranked
No.1 in Germany, France, the
uk and Ireland.
In detail, our offering includes
the following information and
consultancy services:
In detail
Our information services are
tailored to suit client requirements in order to help them
develop innovative concepts
and identify both qualitative
and quantitative solutions to
strategic and operational issues.
The services relate to marketing
at every stage of the product
or service lifecycle, in particular
the clinical product development stage. GfK HealthCare
offers consultancy services and
survey research on a global
basis, as well as panel research
in Germany, France, the uk and
Ireland.
Establishing the strategic
focus of the newly established
GfK HealthCare division, in
particular with regard to
regional aspects as well as
positioning and services
New product development
and market launch of new
products; established brand
management
Status quo analysis and
recommendations on
improving customer loyalty
Establishing a GfK HealthCare
network of subsidiaries in a
total of 13 countries
Brand positioning and brand
price and value assessment
Analysis of communication
efficiency and impact and
sales activities by specific
target group
Acquisition of v2 (now v2 GfK),
the top pharma market
research institute in the usa,
the world’s largest pharma
market
Cooperation with Websurvey
md/Europe online services,
giving us access to pools
of doctors in the usa and
Europe, the world’s major
pharmaceutical markets,
and enabling us to carry out
online surveys
Engaging in projects aimed at
measuring the efficiency and
impact of communications
between the field research
teams of pharmaceutical
companies and doctors Our key services
The HealthCare business division
supplies information and consultancy services to clients in
the pharmaceutical industry,
as well as in the private and
public sector health services, to
support them in their strategic
and operational management.
Focus for 2003
Continuous monitoring of
sales of dental and veterinary
medical products
Monitoring of the advertising
activities of the pharmaceutical industry to include
both prescription and otc
products
The benefits
We help clients to understand
their markets and to identify
how and where they are going.
With our support, strategic decisions and operational marketing
measures can be made more
effective and successful.
Our clients
Our clients are manufacturers
operating both globally and
locally in the pharmaceutical,
dental and veterinary medicine
market segments. The client
base includes top flight companies like Pfizer, 3 m Espe, gsk,
Aventis, Novartis, Astra Zeneca
and Bayer.
75
76
Innovation
GfK SPECIAL
Making yourself heard in
the hubbub of advertising
Innovative ways of making media planning more efficient and effective
for Kraft Foods
77
Innovative ways of making media planning more efficient and effective
for Kraft Foods
Making yourself heard in the hubbub
of advertising
In a world of falling prices and shifting consumer habits, coffee brands are constantly being
faced with new challenges. Kraft Foods has responded by seeking to consolidate and expand
the market position of “Jacobs Coffee”, its top brand, with the aid of new marketing research
tools. In cooperation with GfK, the Group is presently working on a project to merge data
from every conceivable source so as to increase the efficiency and impact of its media planning
for ad campaigns.
Kraft Foods is one of
the world’s leading
food manufacturers.
Established for over
a hundred years, it
owns 35 of the world’s
most lucrative brands
Frederick the Great of Prussia was certainly a ruler
with the will to impose his own plans whatever
resistance he might encounter but even he had to
recognize that he was up against a brick wall when
it came to curbing the thirst of his subjects for an
invigorating cup of coffee. Introducing a coffee
tax proved to be of no avail and so it was in vain
that he dispatched government agents to sniff out
illegal coffee-roasting by individuals in their own
homes. On the contrary, this aromatic beverage
from distant lands had begun its irresistible rise
to the top of the popularity scale. That’s how it
has remained to this day and nowhere more so
than among Germans, who lead the world in the
consumption rankings. Thus, Germany’s finance
minister Hans Eichel can still rely on the coffee
tax introduced by Frederick to bring in revenues
of around a billion euros a year.
Though that might seem like small change when
compared to receipts from oil taxes, the German
Coffee Association proudly proclaims coffee to be
“the second biggest commodity in world trade, the
main source of hard currency for many developing
Paul Remitz, Media and
Advertising Production Manager at Kraft Foods Germany:
“The media landscapes are
much more complex now than
they used to be. The long-term
trend is for advertising
pressure to increase across
all media and categories and
this reduces the “share of
noise” enjoyed by the
individual brand.”
Thorsten Müller, Media
Manager for Strategic
Planning and Research:
“If we could tell just what
impact a tv commercial
can have on each individual
consumer, then an extremely
powerful criterion for tv
advertising strategy would
be available to us. And that
is precisely what we are
looking for in the data
merger project with GfK.”
countries dependent on agriculture, an attractive
source of tax revenue and, not least, Germany’s
favourite drink.” The citizens of the Federal
Republic seem to enjoy their coffee even more
than their beer for example – an average of four
cups a day (160 litres p.a.) as compared with just
one small bottle (125 litres p. a.).”
78
Innovation
GfK SPECIAL
In the old port of Bremen,
stacks of containers
stretching over half a
mile hold coffee beans
waiting to be dispatched
for roasting.
Cost of petrol and cost of coffee: two favourite
topics of conversation for the German consumer
The process of making coffee from roasted
beans is first attested with certainty in an Arabic
manuscript dating from 1587, since which time
the popularity of this drink has spread throughout Europe, making it a very special luxury. In
Germany, there is fierce competition between
brands like Jacobs Coffee, Tschibo, Eduscho,
Melitta and Dallmayr, all battling it out for their
share of a market worth 3.5 billion euros a year
(including vat and the separate coffee tax).
The German Coffee Association notes that “coffee
tends to become a public talking point whenever
the price moves sharply in one direction or the
other,” its only rival for this place of honour being
the price of petrol.
One of the major players in the German coffee
market is the Bremen-based corporation, Kraft
Foods. With brands like Jacobs Coffee, Onko and
Kaffee hag, it has been one of the most successful
roasting companies for many years. Other Kraft
brands from the various divisions of the same
stable – Milka, Toblerone, Miracoli, Philadelphia
and Miracle Whip – are similar success stories in
their own markets. The corporate philosophy is “to
create brands that bring joy every day,” a message
very much in line with the thinking of the founding
fathers of the Group – James Lewis Kraft, Johann
Jacobs and Johann Jakob Tobler.
However, “creating brands” is no easy business
and especially not in the highly competitive food
markets. That lesson is clear from the example
of one of the jewels of the Kraft portfolio, Jacobs
Coffee, the brand with the tempting aroma to spoil
yourself with, according to the advertising slogan.
Over the past ten years, raw coffee consumption
has been on a downward trend, falling from 7.5 kg
per capita in 1992 to 6.6 kg in 2002. At the same
time, the retail price has also slipped down from
between 4.10 and 4.60 euros a pound to the
present level of around three euros.
Consumers are very “price-sensitive” notes Paul
Remitz, the Media and Advertising Production
Manager at Kraft Foods in Bremen. “We face
enormous challenges, particularly in communicating brand worlds.” With all its options for the
consumer, the media landscape is much more
complex now than it ever used to be. The longterm trend is for advertising pressure to increase
across all media and categories and this reduces
the “share of noise” enjoyed by the individual brands.
Social change leads to differentiated life styles
with differing value systems and definitions of »We need to have instruments to show advertising
impact . . . tailored wherever possible to the
particular campaign.«
Kraft Foods is one of the
big names in the German
coffee market.
79
Hot, black and sweet – that’s how people like their
coffee in Arabia, the region from which it was first
imported into Europe.
target groups based simply on demography or
consumption are losing their power of distinction
in the marketing process. In consequence, the
task of putting advertising messages across to
mass target groups is becoming ever more costly.
Remitz refers to a number of other difficulties
facing brand communication. The convergence of
media and the introduction of digital terminals
have opened up new opportunities for viewers to
eliminate advertising. For example, set-top boxes
with their own hard drive permit them to time
their tv viewing in such a way as to skip whole
blocks of commercials. Nevertheless, it is still
possible for advertisers to turn the new facilities
to their advantage. Integrated communication
approaches with interactive offers generate a
higher degree of involvement and this is a basic
prerequisite for ads to generate a lasting impact.
Standing out from the crowd
Despite falling consumption, fierce price competition and the absence of any direct brand
experience, the marketing strategists of Jacobs
Coffee still manage to keep their brand alive and
Andrea Scharrenbroch,
Division Manager Research Consulting & Development,
GfK Fernsehforschung, is in charge of the innovative
data merger projects at Kraft Foods Germany.
80
well through effective marketing communication.
At the same time, they are succeeding in finding
a solution to the familiar problem facing every
brand manager – how to make your own voice
heard over the hubbub of other advertisers and,
more particularly, to attract the attention of those
consumers that the marketing department of
Jacobs Coffee has defined as target groups. The
task of Paul Remitz and his colleague Thorsten
Müller, Media Manager Strategic Planning &
Research at Kraft Foods, is to select the optimum
media mix from TV to Internet, from print to
poster, not only in terms of value for money – a
feat in itself in the strongly fragmented media
market – but also in terms of the impact of the
individual media on the groups specifically
targeted by the Jacobs Coffee messages.
Innovation
GfK SPECIAL
Coffee is the second
biggest commodity
in world trade
Kraft Foods
One of the world’s leading brand manufacturers in the
food industry
Kraft Foods celebrated its 100th birthday in 2002. The
Group is a conglomerate consisting of well-known individual companies such Suchard, Jacobs, Kraft, Kaffee Hag
and Tobler.
Mission
Kraft’s mission is to be widely recognized as the undisputed leader of the global food and beverage industry. To
earn that recognition, we strive to be:
the first choice of our consumers
an indispensable partner to our retailers and other
customers
the most desirable partner for strategic alliances
the employer of choice in our industry
a responsible citizen in our communities
Here, once again, the marketing research data
gathered by GfK has proved to be of great assistance.
As Andrea Scharrenbroch, Division Manager
Research Consulting & Development, GfK Fernsehforschung, points out: “Together with GfK, Jacobs
Coffee was looking for new ways of solving an old
problem that arises in advertising branded goods
of any kind.” Whereas the marketing people look
primarily at the psychological dimensions of the
consumers and their wishes and habits, the media
planners are more concerned with the socio-graphic
levels, because this is where the greatest spreads
and differentiation are to be found.
»Definitions of target groups based simply
on demography or consumption are
losing their power of differentiation in
the marketing process.«
a top tier performer for our investors
Product range and reach
In 2003, the 109,000 people employed by the Group in
19,000 production facilities and commercial representations in 150 countries worldwide generated sales of USD
31 billion.
Kraft Foods offers a wide range of products in the five
segments snacks, beverages, cheese, convenience meals
and grocery.
Kraft Foods has one of the most powerful brand portfolios
in the whole of the consumer goods industry. The Group
owns 35 lucrative brands established for over a century.
The top brands are Milka, Carte d’Or and Toblerone in the
chocolate market; Jacobs, Carte Noire and Kenco in the
coffee market; and Philadelphia, Miracle Whip, Miracoli
and Kraft Ketchup in the delicatessen market.
According to Remitz: “The dimensions here are
the gross and net ranges in percentage terms and
the average number of contacts. And all media
planners use the same instruments. What we need
though are tools which enable us to show the
impact of advertising. Wherever possible, they
should be tailored to the requirements of the
particular campaign, because each one works in
a different way. How do we bring these worlds
together: on the one hand, a very statistically
oriented media planning and, on the other, the very
complex business of data on advertising impact.”
Scharrenbroch concludes: “The task is to bring
together the marketing target groups and the
media target groups.” 81
»The citizens of the Federal Republic seem to enjoy their
coffee even more than their beer for example – an average
of four cups a day (160 litres p. a.) as compared with just
one small bottle (125 litres p. a.).«
Merging data leads to effective planning
instruments
The whole trick lies in merging data of different
kinds or what the GfK marketing researchers call
Integrated Intelligence. According to Thorsten
Müller: “On the one hand, we have an extensive
set of data to show tv usage, the main parameter
set being the socio-demography. On the other,
we have tracking, that is to say regular study of
the success of our advertising campaigns, in which
other people are asked how much impact our
advertising generated with consumers. If we were
also able to determine the extent of the advertising
impact or quantify the impact on each individual
consumer, then a criterion of enormous importance would be available to us in the selection of our
tv strategy. This is precisely what we are trying to
do within the framework of the integrated intelligence approach by simultaneously gathering data
from advertising impact studies carried out on a
continuous basis. The data obtained on individuals
from these investigations is transferred to the
agf-GfK research panel. Theoretically, for every
person on the panel, we should not only have their
own individual television usage values but also
advertising impact data taken from a person whose
central characteristics are similar. This is a sound
basis for optimizing campaigns and a truly impactoriented approach to planning.”
With this innovative data merger project, Kraft
Foods and GfK have followed a creative path that
media agencies, in particular, have hitherto held to
be impossible. However, with brand management
becoming more complex, the consumer more
difficult and the media landscape more expensive,
it is clear that the tools used need to be sharper,
more efficient and more effective. This leaves the
wide field open for GfK and its clients. And above
all, for the coffee roasting companies if they are to
ensure that, 230 years later, Frederick the Great’s
aim to curb coffee consumption is not finally
achieved, albeit unintentionally. Since coffee was
first introduced into
the stately homes
of Europe, it has
established itself
throughout the
continent as a
luxury of a very
special kind.
82
MANAGEMENT
REPORT
MANAGEMENT REPORT OF THE GfK GROUP
84
1. General comments
84
2. The economy
87
3. Economic and financial development
of the GfK Group
90
4. Business divisions
94
90
Consumer Tracking
91
Non-Food Tracking
92
Media
92
Ad Hoc Research
93
HealthCare
94
Other
5. Regions
94
Germany
95
Europe
97
America
97
Asia and the Pacific
98
The GfK network
98
6. Research and development
99
7. Employees
101
8. Organization and administration
102
9. Purchasing
102 10. Environmental protection
102 11. Corporate communications and marketing
103 12. Risk
106 13. Major events since the 2003
financial statements
107 14. Outlook
MANAGEMENT REPORT FOR THE GfK GROUP
1. General comments
The following report refers to the GfK Group. The management
report and annual financial statements for GfK Aktiengesellschaft
are published separately and can be downloaded from the website at www.gfk.de or ordered from GfK.
The GfK Group is presenting its consolidated financial statements for financial year 2003 in accordance with the United
States Generally Accepted Accounting Principles (us gaap). The
previous year’s figures were also reported according to these
principles.
All the financial data for the business divisions and regions is
drawn from the management information system and, like the
consolidated financial statements, is also reported according
to us gaap. Minority participations are not taken into account
and in each case, operating profit therefore excludes net income
from participations.
Where statements refer to the number of staff or employees
this in principle means the number of full-time posts. The terms
full-time employees, staff, employees and persons are used
synonymously.
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.
2. The economy
Overall economic development: upturn has begun
During 2003, the global economic climate improved slightly but
economic progress remained patchy. Overall the global economy
only grew by a modest 3.4 per cent (Euroframe Forecast, 2002:
3.0 per cent). Following either negative or flat economic growth,
the first signs of an upturn appeared during the second half of
the year. This was primarily the result of dynamic expansion
in the usa and continuing strong macro-economic growth in
Asia. Japan is on the verge of moving out of a long phase of
stagnation. Only Europe, particularly the Euro zone, is lagging
behind the general trend.
A decisive factor in the upturn was the fact that the governments
in both the usa and in Asian countries have for some time been
embracing large-scale, expansionist economic policies. These
have been directed against the main pressures which have
influenced the global economy over the past three years: soaring
oil prices which have affected both commercial profitability and
the purchasing power of private individuals, and dramatic losses
on the stock exchanges. The end of the war in Iraq and recovery
in the share markets have assisted the economic measures under
these financial policies. However, despite positive trends overall,
particularly during the second half of the year, the dynamics and
direction of economic development vary greatly in the different
regions and the larger nations.
GNP growth in the regions and countries
important to GfK
2002
20031)
20042)
Germany
0.2
– 0.1
1.4
1.4
France4)
1.2
0.1
1.5
2.5
Euro zone4)
0.9
0.4
1.7
2.1
uk4)
1.7
2.0
2.9
3.1
eu154)
1.0
0.8
1.9
2.4
eu accession countries4)
2.4
3.4
3.8
3.9
eu 254)
1.2
0.9
2.0
2.4
usa4)
2.4
3.1
4.1
3.5
S E Asia4)
6.9
6.4
6.9
7.1
China4)
8.0
8.6
9.0
9.0
4)
20052)
Japan4)
0.1
2.1
1.5
1.3
World3)
3.0
3.4
3.8
3.8
1) Estimate
2) Forecast
3) Euroframe Forecast: eu and Euro Area Economics
4) Figures for 2003 to 2005 from diw weekly report “Grundlinien der Wirtschaftsentwicklung”
(Baseline of economic development) dated 8 January 2004; figures for 2002 from the
diw weekly report “Lage der Weltwirtschaft und der deutschen Wirtschaft im Herbst 2003”
(The global economy and German economy in autumn 2003) dated 17 October 2003
In germany economic development reached its temporary low
point at the end of the first quarter of 2003. For the first time
in almost ten years, gdp fell below the level of the previous
year, and overall economic growth reduced for two successive
quarters for the second time in the past two and a half years.
Although gdp rose during the second half of the reporting
period, Germany – along with the Netherlands (– 0.1 per cent)
and Portugal (– 0.8 per cent) – was among the countries in the
Euro zone showing a markedly weak economy with growth of
– 0.1 per cent (2002: + 0.2 per cent) over the course of the whole
year. Since April/May 2003 early economic indicators in
Germany have shown a gradual upturn again. Consumers and
businesses were relieved when the usa so quickly declared the
Iraq War officially over.
The financial and stock markets recovered perceptibly. The main
driving forces behind the revival were the foreign economy
and rising exports. By contrast, investments either stagnated or
fell. Of particular concern was the fact that despite the slight
economic recovery and increasing consumer optimism regarding
economic growth, private consumption and the propensity to
buy remained weak throughout the year. The reasons behind this
were mainly continuing high unemployment, low growth in real
income and continuing uncertainty among the public over tax
Economic and financial development
reforms, the future of the German state pension and national
insurance. This is very clearly reflected in the rise and fall of the
GfK propensity to buy indicator which GfK researches on behalf
of the European Commission (see table).
Consumer attitudes during the reform debate in 2003
Results of the GfK consumer climate survey1)
Month
of
publication
Opinion
trend
Propensity
to buy2)
Change Consumer
from previclimate
ous month indicator3)
Change
from previous month4)
January
2003
Hoping for
better times
– 31.2
+ 9.8
4.3
– 0.6
February
2003
Scarcely any light
at the end of the
tunnel
3.9
– 0.4
– 30.6
+ 0.6
March 2003 Outlook still
gloomy
– 26.6
+ 4.0
3.7
– 0.2
April 2003
Upturn in sight?
– 32.3
– 5.7
3.6
– 0.1
May 2003
Consumer spending still low
– 39.9
– 7.6
3.8
+ 0.2
June 2003
About to turn
the corner?
– 29.7
+ 10.2
4.1
+ 0.3
July 2003
Consumer confidence fickle
– 33.9
– 4.2
4.4
+ 0.3
August
2003
Consumer confidence unchanged
– 33.2
+ 0.7
4.6
+ 0.2
September
2003
Consumer confidence showing
cautious
improvement
– 31.6
+ 1.6
5.0
+ 0.4
October
2003
Consumer confidence remains low
– 30.9
+ 0.7
5.1
+ 0.1
November
2003
Consumer confidence recovering slightly
– 25.8
+ 5.1
5.1
0.0
December
2003
Christmas period
fails to attract
consumers
– 32.2
– 6.4
5.2
+ 0.1
January
2004
Frosty mood
– 41.7
– 9.5
5.2
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 indicator on consumer confidence 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 is + 58.0 in April 1987 (Western Germany only;
Germany as a whole +36.5 in April 1999), whilst the historic minimum value is – 55.4 in
November 2002.
3) The consumer climate indicator is used to describe 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.
4) Index points.
MANAGEMENT REPORT
In 2003, the countries in the european union failed to keep
pace with global economic recovery. gdp increased by only
0.8 per cent (2002: 1.0 per cent), and in the euro zone by just
0.4 per cent (2002: 0.9 per cent). Growth in the emu therefore
remains once again behind that of the uk (2.0 per cent, 2002:
1.7 per cent). However, after flat growth during the first half of
last year, general business activity in the Euro zone has shown
a pronounced increase since the third quarter of 2003. This
revival was due entirely to the strong rise in exports, particularly
to the uk, Asia and the usa. By contrast, domestic demand and
imports remained unchanged. In view of the difficult situation
on the labour market and overall low wage increases, private
consumer spending remained low, particularly for slow moving
goods.
By contrast, the ten accession countries have shown markedly
higher rates of growth than the countries of the European Union,
particularly from the third quarter 2003 onwards. The dynamism
of their economic growth is primarily the result of high domestic
demand. In most countries, rising private consumption was
mainly due to continuous increases in productivity and wages in
real terms. In 2003, the gnp of the countries due to join the eu
rose by 3.4 per cent (2002: 2.4 per cent).
After initially hesitant growth during the first two quarters,
the us economy experienced a sharp upturn towards the
end of 2003. Following the end of the war in Iraq, consumer
climate indicators clearly improved and overall production
accelerated. This is not just due to the fact that interest rates
have been extremely low for quite some time now but also
to the financial policy, which has contributed to this trend
through massive expansion in public spending and tax cuts.
In addition, favourable underlying conditions also benefited
the American economy.
In the meantime the upturn has become more widespread.
Whilst private consumption was initially the decisive factor on
which recovery was founded, by the end of the year business
investment confidence also strengthened. gdp for the usa rose
during 2003 by 3.1 per cent (2002: 2.4 per cent).
The economies in the countries of south-east asia were
fairly dynamic in 2003, primarily as a result of a strong rise
in foreign trade. This big increase in export activity was
frequently accompanied by stable domestic demand. Domestic
demand in china rose particularly sharply as did investment
levels because of the prospect of healthy profits. According to
experts, high levels of growth in retail sales indicate that private
consumption has also risen following clear increases in wages
in real terms. This growth was attributable to increasing international integration following membership of the World Trade
85
Organization combined with a fixed exchange rate and almost
stable prices. In South-East Asia, gdp increased by 6.4 per cent
(2002: 6.9 per cent) and in China by as much as 8.6 per cent
(2002: 8.0 per cent).
In 2003, after years of stagnation, japan’s economy experienced
an upturn. This particularly applied to exports where Japan
benefited, among other things, from the dynamic growth in the
countries in South-East Asia. By contrast, growth in private
consumption was only slight and according to diw (Deutsches
Institut für Wirtschaftsforschung) was even negative by the end
of the year. Experts attribute this weak growth in vital elements
of gdp mainly to the over-stretched state of the labour market
and the uncertainties perceived by the Japanese people regarding their national insurance system. In 2003, gdp increased by
2.1 per cent (2002: 0.1 per cent).
Market research industry in comparison with GNP and
advertising industry1)
1994
1995
1996
1997
100 %
100 %
100 %
112.1 %
104.7 %
102.6 %
120.9 %
108.6 %
105.7 %
129.7 %
114.0 %
109.4 %
1998
147.3 %
118.0 %
112.3 %
1999
The market research sector: facing weak global economy
2000
In the 1990s, the market research sector reported high levels of
growth and its sales volume almost trebled worldwide. However,
the global economic downturn of the past two years has also led
to a marked decline in the growth of market research. According
to esomar, sales rose by 4.5 per cent in us dollar terms, but by
– 0.6 per cent in euro terms. This large discrepancy is mainly due
to the difference in currency trends between the us dollar and
the euro: approx. 40 per cent of global sales of market research
services is apportioned to the us dollar and almost the same
amount is concluded in euros. The actual growth in the national
currencies of each of the five main countries for market research
reveals a different picture. The sector grew by 1 per cent in the
usa and uk respectively, by 3 per cent in France and by 2 per
cent in Germany. In Japan, sales for market research fell by 2 per
cent. Experts are forecasting sector growth of between 2 and 3
per cent for 2003.
Market research markets
by region and by country (in %)
2001
2002
America
of which usa
46.0
39.0
45.0
38.0
of which Japan
13.0
7.0
13.0
6.0
Europe
of which uk
of which Germany
of which France
40.0
10.0
9.0
8.0
41.0
11.0
9.0
8.0
1.0
1.0
Middle East/Africa
86
160.4 %
126.7 %
115.8 %
167.0 %
137.6 %
120.3 %
2001
174.7 %
128.8 %
121.4 %
2002
182.4 %
128.5 %
123.6 %
2003
187.9 %
130.1 %
126.1 %
1) oecd for gnp, Zenith Optimedia 2003 for the advertising industry,
esomar for market research; the conversion factor for 1997 has been
applied to 1993 – 1996: eur 1 = usd 1.1346; change from previous year
in per cent.
Market research
Advertising
gnp
Generally, market research is less affected by economic
fluctuations than the media or advertising industry. One of
the reasons for this is that clients still require continuous
research into consumer habits, retail figures and media reach
even in times of recession. 47 per cent of market research
sales worldwide comes from continuous research.
With 53 per cent of the market research volume worldwide,
ad hoc research is much more susceptible to economic trends.
This applies particularly to commercial communications,
branded goods and media.
3. Economic and financial development of the
GfK Group
Sales and income: above-average growth in income
With a 6.4 per cent rise, GfK has increased its sales from
eur 559.4 million in 2002 to eur 595.3 million. This represents
organic growth of 3.7 per cent, exceeding that of the market
research sector, which increased sales by an estimated 2 to 3
per cent. A substantial part of the increase of 6.1 percentage
points came from subsidiary companies consolidated for the
first time in the year under review. These include v2 GfK in
the usa and media control GfK International in Germany.
Another factor was that ifr in France and Significant GfK in
Belgium had only been included pro rata in the figures for
2002 but were consolidated for the full year in financial year
2003.
Earnings1)
In eur million
Sales
2002
Actual
2003
Actual
Changes
in %
+ 6.4
559.4
595.3
– 512.1
– 528.0
+ 3.1
47.2
67.3
+ 42.4
Other income less other
expenses
– 3.6
– 0.9
– 74.5
ebitda
68.5
91.2
+ 33.0
Operating costs
Operating profit
as percentage of sales
12.2
15.3
–
ebit before income
from participations
43.6
66.4
+ 52.1
7.8
11.1
–
Net income from participations
6.4
3.1
– 51.3
50.0
69.5
+ 38.9
8.9
11.7
–
Net interest income
– 2.3
– 2.0
– 13.3
Net other
financial income
– 2.4
– 1.2
– 50.8
Result from ongoing business
activity
45.3
66.3
+ 46.4
ebit after income
from participations
Taxes on income
and earnings
– 15.3
– 25.2
+ 65.0
30.0
41.1
+ 36.9
Minority interests’ share
of total income
– 4.3
– 7.7
+ 78.7
25.7
33.3
+ 29.8
1) Rounding differences may occur
MANAGEMENT REPORT
We are pleased that as in the year before, operating income
has shown an above-average increase in 2003. Two factors were
behind this: firstly, the increase in sales already mentioned and
secondly, the below-average rise in operating costs. With
an increase of 3.1 per cent in 2003, they were more than
3 percentage points below the growth rate in sales.
The personnel cost ratio, i.e. the ratio of the largest area of
costs – personnel expenses – to sales, fell from 43.6 per cent in
2002 to 43.1 per cent in 2003. In absolute terms, personnel
expenses totalled eur 256.6 million (2002: eur 244.1 million).
Scheduled depreciation and amortization, particularly on software and fixtures and fittings of eur 24.8 million remained almost
unchanged from the previous year (2002: eur 24.9 million).
other income less other expenses amounting to eur
– 0.9 million includes the balance of other income from
deconsolidations of eur – 0.8 million and the result of the
disposal of tangible and intangible assets amounting to
eur – 0.2 million. Income and expenditure from currency
effects almost balance out over the reporting year; in 2002
these produced expenses of eur 2.1 million.
The GfK Group increased its ebit before income from
participations by 52.1 per cent from eur 43.6 million in 2002
to eur 66.4 million in 2003. The ebit margin, which is ebit in
relation to sales, also improved markedly from 7.8 per cent in
2002 to 11.1 per cent in 2003. net income from participations
fell from eur 6.4 million in 2002 to eur 3.1 million in 2003.
This includes depreciation on the shareholding in GfK do Brasil
in Brazil of eur 1.5 million, and depreciation on m2a s.a. in
France of eur 1.0 million, which was carried out as part of the
at-equity valuation. Income from participations for 2002 included
non-recurring income of eur 3.0 million linked to the split of
Infratest + GfK Gesundheitsforschung GmbH & Co, Berlin.
ebit after income from participations for the GfK Group
also showed an above-average increase over the previous year,
up by 38.9 per cent to eur 69.5 million in 2003 (2002: eur 50.0
million). The margin, i.e. ebit after income from participations in
relation to sales, also showed a clear increase from 8.9 per cent
in 2002 to 11.7 per cent in 2003.
GfK’s other financial income also improved. Following a
deficit of eur 2.4 million in 2002, financial year 2003 reduced
this deficit to just eur 1.2 million. The figure essentially comprises three elements: firstly, the final write-down of loans to bwv
Holding in Switzerland, totalling eur 0.9 million, secondly, the
write-down of a loan to Caribou Lake Software in the usa of
eur 1.1 million and thirdly, income from derivative financial
instruments totalling eur 0.6 million, which are used to cover
currency and interest rate risks. In 2002 other financial income
87
was affected by expenses resulting from the waiver on a loan
to mmxi Europe in the Netherlands of eur 1.2 million and the
residual depreciation of the holding in an American company,
Jupiter Media Metrix Inc., of eur 0.7 million.
Balance sheet growth
1)
31.12.2002
31.12.2003
Change
in %
Share
of total
assets
in %
Fixed assets
263.8
285.0
+ 8.0
56.8
Current assets
189.8
200.9
+ 5.9
40.0
Deferred taxes
9.3
8.3
– 10.7
1.7
Prepaid expenses
6.7
7.8
+ 16.6
1.6
469.6
502.0
+ 6.9
100.0
+ 12.5
40.7
57.4
In eur million
Assets
Overall this led to a rise in the result from ongoing business
activity of 46.4 per cent from eur 45.3 million in 2002 to eur
66.3 million in 2003.
The income tax rate increased compared to the previous
year from 33.7 per cent to 38.0 per cent. There were two main
reasons for this: firstly, in 2003 there was a one-off rise of
1.5 percentage points in the corporation tax charge in Germany
and secondly, a tax provision was set up for the current tax audit
in Germany.
Total assets
Shareholders’ equity and liabilities
181.5
204.1
Provisions, liabilities
and minority
interests
281.2
288.2
+ 2.5
Deferred taxes
6.0
9.1
+ 51.4
1.8
GfK Group: ebit after income from participations and consolidated total income
before minority interests 1999 – 2003 in eur million1)
Deferred income
0.9
0.6
– 35.6
0.1
19992)
Total shareholders’
equity and liabilities
469.6
502.0
+ 6.9
100.0
26.7
13.7
2000
39.4
25.4
2001
32.7
5.5
2002
50.0
30.0
2003
69.5
41.1
1) Up to 2000, in accordance with the German Commercial Code (hgb). From 2001 in accordance
with us gaap.
2) Excluding ipo costs
ebit after income from participations
Consolidated total income before minority interests
The GfK Group has increased its consolidated total income
before minority interests by 36.9 per cent from eur 30.0
million in 2002 to eur 41.1 million in 2003.
Net of minority interests, GfK’s consolidated total income
increased by 29.8 per cent compared with the previous year
to eur 33.3 million (2002: eur 25.7 million). earnings per
share amounted to eur 1.28 compared with eur 0.98 in 2002.
current assets rose from eur 189.8 million at the end of
2002 to eur 200.9 million as at 31 December 2003. This was
solely attributable to an increase of eur 6.2 million in trade
receivables, compared to a reduction in other receivables and
assets of eur 3.2 million. Furthermore, liquid funds grew by
eur 8.1 million.
shareholders’ equity increased by eur 22.6 million to
eur 204.1 million. The increase was attributable to the following
factors: consolidated income of eur 33.3 million less the
total dividend disbursement and currency effects relating to
consolidations reported under other comprehensive income.
As at 31 December 2003, the equity ratio amounted to
40.7 per cent (2002: 38.7 per cent).
Development of equity ratio in per cent
1999 –20031)
19992)
Asset and capital situation: equity ratio increased to
over 40 per cent
Compared with the previous year, the GfK Group’s total assets
increased by eur 32.4 million to eur 502.0 million. On the assets
side, the increase of eur 21.2 million was attributable to growth in
fixed assets. Acquisitions and the topping-up of shareholdings
increased goodwill by 19.3 per cent as at 31 December 2003
from eur 135.6 million in 2002 to eur 161.8 million in 2003.
Fixtures and fittings and tenants’ fittings fell by eur 2.3 million.
88
52.3
2000
2001
2002
2003
49.6
39.5
38.7
40.7
1) Up to 2000 in accordance with the German Commercial Code (hgb). From 2001
in accordance with us gaap.
2) The change resulting from the ipo inclusive, without which the figure
would have been 29.7.
minority interests increased by eur 7.9 million and stood
at eur 25.5 million as at 31 December 2003. This rise is
attributable to both improved consolidated income and the sale
of a 5 per cent business share in GfK Non-Food Tracking
Holding in Germany to The npd Group in the usa, as well as
the first-time consolidation of media control GfK International in
Germany and v2 GfK in the usa, in which minority shareholders
also have holdings.
The remaining level of other provisions and liabilities were
virtually unchanged. provisions rose by eur 5.1 million,
primarily as a result of higher tax provisions and the change
in the scope of consolidation. financial liabilities fell by
eur 6.3 million. trade payables were reduced by eur 8.2
million. More than a third of the increase of eur 6.7 million in
liabilities on orders in progress arises from subsidiary companies, which have been consolidated for the first time.
MANAGEMENT REPORT
Capital expenditure was fully financed from the cash flow
from ongoing business activity of eur 69.2 million (2002:
eur 69.3 million). Net of these expenses amounting to eur 20.9
million, free cash flow of eur 48.3 million (2002: eur 40.7
million) remains. This was sufficient to finance all of GfK’s
acquisitions and other financial investments in their entirety
during 2003.
GfK was also able to reduce its financial liabilities during
2003. The cash flow from financing activity was eur – 16.2 million (2002: eur + 2.9 million in 2002).
Change in net indebtedness1)
In eur million
Liquid funds
Short-term securities
Liquid funds and short-term
securities
Investment and financing: low net indebtedness
In 2003, GfK investments totalled eur 47.7 million (2002:
eur 76.6 million). This related essentially to two items: eur 24.8
million for the acquisition of consolidated companies, other
business units and the addition of other participations, as well
as eur 20.9 million for the acquisition of software, fixtures and
fittings and other tangible assets.
31.12. 2002
31.12. 2003
Change
in %
45.2
53.3
+ 17.9
7.3
7.5
+ 2.6
52.5
60.8
+ 15.7
Liabilities
to banks
47.1
45.0
– 4.6
Pension provisions
19.2
19.0
– 1.0
Leasing liabilities
15.8
17.1
+ 8.4
Other interest-bearing liabilities
10.0
4.6
– 54.3
Interest-bearing liabilities
92.1
85.7
– 7.0
– 39.6
– 24.9
– 37.2
Net indebtedness
Change in free cash flow1)
In eur million
Cash flow from ongoing business
activity
Capital expenditure
Free cash flow before acquisitions,
other investments and asset
disposals
Acquisitions
Other financial investments
Asset disposals
Free cash flow after acquisitions,
other investments and asset
disposals
31.12. 2002
31.12. 2003
Change
in %
69.3
69.2
– 0.1
– 28.6
– 20.9
– 26.6
net indebtedness, that is the balance of cash, cash equivalents
and short-term securities less interest-bearing liabilities and
pension provisions, stood at eur 24.9 million (2002: eur 39.6
million).
40.7
48.3
+ 18.5
– 47.0
– 24.8
– 47.3
Gearing and ratio of net indebtedness
to ebit, ebitda, free cash flow
– 1.0
– 2.0
+ 98.8
In per cent
2002
2003
3.4
5.0
+ 47.0
Gearing
21.8
12.2
Net indebtedness/ebit
90.8
37.5
Net indebtedness/ebitda
57.8
27.3
Net indebtedness/free cash flow
97.2
51.5
– 3.9
26.5
– 780.8
gearing, which is the ratio of net indebtedness to shareholders’
equity, amounted to 12.2 per cent in 2003 (2002: 21.8 per cent).
The ratio of net indebtedness to ebit, ebitda and free cash flow
shows that GfK is in a position to repay its borrowings in approx.
six months.
89
The GfK Group used eur 35.0 million for soft facts in 2003,
eur 2.8 million more than in 2002. These intangible assets
are not capitalized but are charged directly to the income
statement. They include, in particular, expenses for setting up
and maintaining panels, non-capitalized costs of proprietary
software as well as the costs of training and continuous
professional development. This investment is essential to
securing the long-term success of the company, as it contributes
to the creation of market entry barriers.
GfK Group: breakdown of growth
in sales and operating profit 20031)
Total growth
+ 6.4 %
+ 39.2 %
Growth through acquisitions
+ 6.1 %
+ 15.3 %
Organic growth
+ 3.7 %
+ 27.2 %
Expenses for soft facts
Exchange rate effects
In eur million
2002
2003
Change
in %
Costs of maintaining panels
(including recruitment)
19.5
20.8
+ 6.2
Software development costs
+ 19.7
– 3.3 %
– 3.3 %
Sales
7.1
8.5
Training and continuous
professional development
5.0
5.0
+ 0.5
Other
0.6
0.7
+ 28.4
Total
32.2
35.0
+ 8.7
Operating profit
Share of business divisions in total sales 2003
in %
Source: Management Information System
The increase in costs for the recruitment and payment of
panel households and retailers produced higher panel costs.
In addition to a number of international projects, the rise in
development costs of proprietary software is attributable to the
startrack analysis and production system which is now in the
final stages of development.
in eur
million
Consumer Tracking
15
89.8
Non-Food Tracking
28
166.7
Media
10
58.3
Ad Hoc Research
37
220.8
HealthCare
8
49.3
Other
2
10.4
Total
100
595.3
4. Business divisions
The GfK Group provides services in its business divisions
Consumer Tracking, Non-Food Tracking, Media, Ad Hoc
Research and the new business division, HealthCare, which
was set up in mid-2003 (further details on p. 101). To facilitate
a comparison between the figures for 2003 and 2002, the
figures for HealthCare business in 2002 are shown separately.
In the 2002 Annual Report, these were still reported under
Ad Hoc Research and Other. Following the reorganization, the
division Other mainly comprises GfK ag central services for
subsidiary companies, participations and partners.
Consumer Tracking: restructuring and cost management
take effect
GfK’s Consumer Tracking division provides clients throughout
Europe with information services on consumer purchase decisions
and behaviour (further details on p. 43).
Consumer Tracking:
key figures
2002
2003
Sales
86.0
89.8
+ 4.4
2.4
3.5
+ 44.8
+ 2.8
+ 3.9
+ 1.12)
Number of employees
863
829
– 3.9
of which abroad
590
576
– 2.4
Operating profit
Margin in %1)
2) Percentage points
90
Change
in %
In eur million
Business divisions
During financial year 2003, GfK’s Consumer Tracking
division continued its positive growth trend. Sales rose from
eur 86.0 million to eur 89.8 million. 6.2 percentage points
were attributable to organic growth, with business from the
Benelux countries providing the main impetus. There was no
acquisitions-related growth. Currency effects reduced sales
growth by 1.8 per cent.
At the same time, the operating profit from the business division
improved. Operating profit rose by 44.8 per cent to eur 3.5 million compared to eur 2.4 million in 2002. The margin stood
at 3.9 per cent (2002: 2.8 per cent). This is mainly attributable
to the consistent measures taken to restructure the business
division and to the savings achieved by the new standard
production system, aTRACKtive. The largest contribution to
the positive growth in operating profit came from Germany, the
Benelux countries and Northern Europe.
MANAGEMENT REPORT
Non-Food Tracking:
key figures
In eur million
2002
2003
Change
in %
Sales
137.3
166.7
+ 21.4
24.5
36.1
+ 47.3
Margin in %1)
+ 17.8
+ 21.6
+ 3.82)
Number of employees
1,394
1,517
+ 8.8
of which abroad
1,145
1,224
+ 6.9
Operating profit
During the year under review, the Non-Food Tracking division
further consolidated its excellent market position. Sales increased
by 21.4 per cent from eur 137.3 million in 2002 to eur 166.7 million in 2003, of which 18.0 per cent came from organic growth.
This was the highest organic growth rate of all the GfK divisions.
Acquisitions contributed 6.9 percentage points to the rise in sales.
These referred mainly to the ifr Group which was acquired as at
1 July 2002 and consolidated for the first time, and to media control
GfK International, in which GfK took a majority shareholding in
mid-2003. Currency effects reduced sales growth by 3.5 per cent.
Consumer Tracking: breakdown of growth
Total growth
+ 4.4 %
+ 44.8 %
0.0 %
0.0 %
Organic growth
+ 6.2 %
+ 48.6 %
– 1.8 %
– 3.8 %
Sales
Operating profit
At the end of 2003, the Consumer Tracking division employed
829 personnel in a total of 23 subsidiary companies (2002: 863).
This represents 16 per cent of the total GfK workforce. Nearly
70 per cent worked in 21 countries outside Germany. The
number of employees fell by 34 compared with the previous year
due mainly to the reduction in staffing levels in data collection
services in Germany.
Despite further considerable investment on innovations in this
segment, in particular for the further development of the
startrack analysis and production system and encodex software
used for e-commerce, operating profit in the Non-Food Tracking
division was up 47.3 per cent from eur 24.5 million to eur 36.1
million. Of this total, 36.5 percentage points are attributable
to organic growth which is mainly due to outstanding business
growth in Germany and Asia. 13.6 percentage points of this
increase are attributable to companies consolidated in the GfK
Group for the first time. Currency effects reduced operating
profit by 2.9 per cent. As a result of the overproportional rise in
operating profit, the margin increased sharply from 17.8 per cent
to 21.6 per cent.
Non-Food Tracking: breakdown of growth
in sales and operating profit1)
Total growth
+ 21.4 %
Non-Food Tracking: most successful business division
+ 47.3 %
Via its subsidiaries, participations and business partners, GfK’s
Non-Food Tracking division provides clients with information
services regarding sales of consumer durables and services,
particularly in the it, consumer electronics, telecommunications,
household appliances and photographic markets in 48 countries.
The entertainment market sector was added to the list in 2003
(further details on p. 51).
+ 6.9 %
+ 13.6 %
Organic growth
+ 18.0 %
+ 36.5 %
– 3.5 %
– 2.9 %
Sales
Operating profit
91
The Non-Food Tracking division employs 1,517 staff (2002:
1,394) in 47 subsidiaries representing around 30 per cent of
the GfK workforce. 80.7 per cent of the staff in the Non-Food
Tracking division were employed in GfK companies abroad.
Media: breakdown of growth
Total growth
– 4.9 %
+ 23.6 %
Media: operating profit and margin show significant
improvement
The Media division provides its clients with information services
on the intensity and nature of media usage and media acceptance
(further details on p. 59) in 22 countries. With the establishment
of GfK Media in Ruislip/Eastcote near London in March 2003,
GfK has reinforced its presence in the uk.
Organic growth
0.0 %
0.0 %
Following a poor year in 2002, the media research market
failed to recover in 2003. Consolidated sales fell accordingly
by 4.9 per cent to eur 58.3 million (2002: eur 61.3 million).
Currency effects depressed sales growth by 1.1 per cent. There
was no growth relating to acquisitions. The low demand for
media research services due to a weak economy, was only
partially offset by stability in the number of long-term contracts
for continuous tv and radio ratings research which generate
around 60.9 per cent of the Media division’s sales. In 2003,
GfK extended two long-term tv research contracts: the 3 year
contract for continuous tv research in Austria and the contract
for continuous radio research in Switzerland. GfK therefore has
long-term tv and radio research surveys in place in a total of
8 different countries.
Media:
key figures
In eur million
Sales
Operating profit
Margin in %1)
Change
in %
2002
2003
61.3
58.3
– 4.9
6.1
7.5
+ 23.6
+ 9.9
+ 12.8
+ 2.92)
Number of employees
345
328
– 4.9
of which abroad
199
206
+ 3.5
Despite the drop in sales, GfK increased its operating profit in
the Media division by 23.6 per cent to eur 7.5 million. The
margin rose from 9.9 per cent to 12.8 per cent, which is mainly
attributable to consistent cost management.
– 3.8 %
+ 24.9 %
– 1.1 %
– 1.3 %
Sales
Operating profit
Media employs 328 people spread over a total of 32 subsidiaries
(2002: 345 people) representing 6.5 per cent of the total
workforce. 62.8 per cent of the total work outside Germany.
Compared with the previous year, the number of employees in
the Media division was reduced by 4.9 per cent. Owing to the
weak economy in 2003, GfK largely did not replace staff who left.
Ad Hoc Research: restructuring and cost management are
taking effect
Through its 41 subsidiaries in 28 countries and via partnerships
in another 63 countries, the Ad Hoc Research division provides
clients around the world with partly standard, partly customized
services, which are used for operational and strategic business
decisions (further details on p. 67).
Following above-average sales growth in 2002, both organic and
by acquisition, GfK achieved further organic growth of 1.3 per
cent in 2003. Growth from acquisitions amounted to 0.9 per
cent. Currency effects reduced sales, which totalled eur 220.8
million, by 3.8 per cent (2002: eur 224.5 million).
Ad Hoc Research:
key figures
2002
2003
Sales
224.5
220.8
– 1.6
12.8
15.4
+ 20.4
+ 1.32)
Operating profit
Margin in %1)
+ 5.7
+ 7.0
Number of employees
1,648
1,706
+ 3.5
of which abroad
1,274
1,336
+ 4.9
92
Change
in %
In eur million
Business divisions
Despite unfavourable exchange rates, GfK operating profit
from the Ad Hoc Research division showed a clear increase of
20.4 per cent to eur 15.4 million (2002: eur 12.8 million). The
drop of 4.1 per cent owing to currency effects was more than
offset by strong organic growth of 22.6 per cent. The margin
increased from 5.7 to 7.0 per cent. Restructuring of business
activities in the uk, Sweden and Italy combined with active cost
management and the key account management system for major
clients all contributed to this result.
the fact that Martin Hamblin GfK in the UK and Martin Hamblin
Research in the usa failed to perform as expected. However, by
the end of the year, the number of orders and sales growth in
these companies had both improved. Currency effects reduced
sales from this business division by 7.7 per cent.
HealthCare:
key figures
In eur million
Sales
Ad Hoc Research: breakdown of growth
Operating profit
Margin in %1)
Total growth
– 1.6 %
MANAGEMENT REPORT
Change
in %
2002
2003
35.8
49.3
+ 37.7
5.0
6.3
+ 25.6
+ 13.9
+ 12.7
– 1.22)
Number of employees
167
228
+ 36.5
of which abroad
101
159
+ 57.4
+ 20.4 %
+ 0.9 %
+ 1.8 %
Organic growth
+ 1.3 %
+ 22.6 %
– 3.8 %
– 4.1 %
Sales
Operating profit
As at 31 December 2003, the Ad Hoc Research division employed
1,706 staff (2002: 1,648 people), representing 34 per cent of the
total GfK workforce. Around 78 per cent of the staff belong to
GfK companies outside Germany. The number of staff increased
by 58 employees compared to the previous year. Most of this
increase is due to the setting up of a field sales network at the
Turkish company, Procon GfK.
Operating profit rose by 25.6 per cent from eur 5.0 to 6.3 million.
Once again the newly acquired v2 GfK made a major contribution.
With regard to organic growth, GfK recorded a drop of 46.2 per
cent, mainly due to the unsatisfactory growth in operating profit
from Martin Hamblin GfK in the uk and Martin Hamblin Research
in the usa. Currency effects reduced operating profit from this
business division by 5.2 per cent. The margin was 12.7 per cent
(2002: 13.9 per cent).
HealthCare: breakdown of growth
Total growth
+ 37.7 %
+ 25.6 %
+ 62.7 %
+ 77.0 %
HealthCare: in the start-up phase
The HealthCare division of GfK offers information and advisory
services on drugs, bio-technology, diagnostics, clinical equipment, laboratory and surgery accessories as well as dental and
veterinary medicine in a total of 12 European countries and the
usa (for further details see p. 75).
Sales in the HealthCare division rose by 37.7 per cent from eur 35.8
million to eur 49.3 million. The growth was entirely due to
additions, primarily the acquisition of v2 GfK as at 1 July 2003.
The company, which specializes in pharmaceutical market
research, reinforces GfK’s position in the usa, the largest market
in the world in the pharmaceutical, bio-technology and medical
diagnostics sectors. In terms of organic growth, sales were
unsatisfactory with a drop of 17.4 per cent. This is mainly due to
Organic growth
– 17.4 %
– 46.2 %
– 7.7 %
– 5.2 %
Sales
Operating profit
HealthCare is the smallest of the GfK divisions in terms of
personnel, employing 228 people (2002: 167 people) or 4.5 per
cent of the total GfK workforce spread across 13 GfK subsidiaries.
70 per cent of the total work in companies outside Germany.
Compared with the previous year, the number of employees in
the HealthCare division increased considerably following the
acquisition of a majority holding in v2 GfK.
93
Other: services for subsidiaries, participations and partners
5. Regions
The Other division primarily comprises the Group Services of
GfK ag, GfK Data Services/Business Solutions & Processing
as well as GfK Methoden- und Produktentwicklung (Method
and Product Development) that provide services for subsidiary
companies in the GfK Group, participations and their business
partners.
In 2003, all regions in which the GfK Group is active increased
their operating profit from the previous year. With the
exception of Northern Europe, the same applied to sales.
GfK Group sales 1999 – 2003
in Germany and abroad in eur million1)
Total
Other:
key figures
1999
2002
2003
Change
in %
Sales
14.5
10.4
– 27.9
Operating profit
– 2.4
– 1.4
+ 40.4
– 16.8
– 13.9
– 2.92)
Number of employees
462
458
– 0.9
of which abroad
105
106
+ 1.0
In eur million
Margin in %1)
164
217
381
177
2000
293
470
192
2)
2001
314
506
205
2002
354
559
222
2003
373
595
1) From 2001 in accordance with us gaap
2) Pro forma statements
In 2003, the Other division achieved sales of eur 10.4 million,
a reduction of 27.9 per cent compared to the previous year
(2002: eur 14.5 million). The result was attributable mainly to
the lower volume of services of around eur 3 million which
GfK Data Services/Business Solutions & Processing provided for
iri/GfK.
The division recorded an operating loss of eur 1.4 million
(2002: eur – 2.4 million) in 2003. In the year under review, the
operating result was adversely affected, in particular, by the
consultancy costs incurred in connection with acquisitions and
the reduction in services provided to iri/GfK.
In Germany
Abroad
Number of GfK employees 1999 – 2003
in Germany and abroad
Total
1999
2000
20011)
2002
2003
1,366
2,310
3,676
1,345
2,867
4,212
1,443
3,210
4,653
1,465
3,414
4,879
1,459
3,607
5,066
1) Pro forma statements
In Germany
Abroad
Other: breakdown of growth
Share of regions in total sales 20031)
Total growth
– 27.9 %
+ 40.4 %
0.0 %
0.0 %
Western and Southern Europe
Organic growth
– 26.9 %
+ 37.2 %
37
221.7
+ 3.2 %
9
54.1
35
204.7
Central and Eastern Europe
5
31.8
America
8
48.6
Total
– 0.9 %
6
34.3
100
595.3
Operating profit
The Other division mainly employs staff in Germany. At the
end of 2003, it employed a total of 458 full time personnel
(2002: 462).
94
in eur
million
Northern Europe
Sales
Germany
in %
Germany: strong rise in operating income and margins
In Germany, the home country of the GfK Group and still its most
important single market, GfK has 21 subsidiaries, twelve of which
have their registered office in Nuremberg. GfK has been the largest
market research group in the German market by far for many years.
Regions
Compared with 2002, GfK increased its sales in its home market
by 8.3 per cent from eur 204.7 million to eur 221.7 million,
thereby achieving a total of 37.2 per cent of the consolidated sales
of the GfK Group in 2003. Of this, 3.5 percentage points were
attributable to organic growth due, in particular, to pleasing
growth in the Non-Food Tracking division. This offset the drop in
sales by GfK Data Services/Business Solutions & Processing and
the Media division. Growth arising from acquisitions amounted
to 4.8 per cent. Specifically, this refers to the acquisition as at
1 July 2003 of the retail tracking business of media control GfK
International in the entertainment market segment, as well as to
the two companies, GfK HealthCare and GPI Kommunikationsforschung, which were both consolidated for the full year for
the first time in 2003.
During the period under review, there was an overproportional
rise in GfK’s operating profit in Germany in relation to sales
of 27.1 per cent to eur 22.9 million (2002: eur 18.0 million).
Most of this growth was organic (18.2 per cent) and is mainly
due to success in the Non-Food Tracking division. The salesrelated margin in Germany increased from 8.8 per cent to
10.3 per cent.
MANAGEMENT REPORT
Europe: profits further improved
Outside Germany GfK has a presence in 28 countries through
64 subsidiaries and participations.
In northern europe, the GfK Group has eight subsidiaries
in Denmark, Norway, Sweden and the uk. In 2003, GfK sales
in this region fell by 8.4 per cent to eur 54.1 million (2002:
eur 59.1 million); 3.3 percentage points of this drop are organic.
This is partly attributable to the unsatisfactory business
performance by Martin Hamblin GfK in the uk. The closure as
at 30 September 2003 of the loss-making Swedish company,
Borell Market Research, also contributed to a reduction in sales
of eur 1.0 million. Currency effects reduced sales by 6.1 per cent.
Northern Europe:
key figures
In eur million
2003
59.1
54.1
– 8.4
1.9
3.2
+ 70.7
+ 3.2
+ 5.9
+ 2.72)
500
486
– 2.8
Sales
Operating profit
Margin in %1)
Change
in %
2002
Number of employees
Germany:
key figures
Change
in %
In eur million
2002
2003
Sales
204.7
221.7
+ 8.3
18.0
22.9
+ 27.1
Margin in %1)
+ 8.8
+ 10.3
+1.52)
Number of employees
1,465
1,459
– 0.4
Operating profit
As at 31 December 2003, GfK employed 1,459 full-time
personnel in its German subsidiaries (2002: 1,465), representing
28.8 per cent of the total workforce.
Germany: breakdown of growth
In contrast, growth in operating profit has been pleasing.
It rose by 70.7 per cent from eur 1.9 million in 2002 to eur 3.2
million. Currency effects reduced operating profit by 11.9 per
cent. Organic growth in operating profit amounted to 80.3 per
cent, due primarily to the successful restructuring of the ad hoc
research business at Martin Hamblin GfK, uk and the ad hoc
research business in Sweden. In 2003, the consolidated salesrelated margin of 5.9 per cent was almost double that of 2002
(3.2 per cent).
Northern Europe: breakdown of growth
Total growth
– 8.4 %
+ 70.7 %
Total growth
+ 8.3 %
+ 1.0 %
+ 2.3 %
+ 27.1 %
Organic growth
+ 4.8 %
+ 8.9 %
– 3.3 %
+ 80.3 %
Organic growth
+ 3.5 %
– 6.1 %
– 11.9 %
+ 18.2 %
0.0 %
0.0 %
Sales
Sales
Operating profit
Operating profit
95
At the end of 2003, the GfK Group employed 486 personnel in
Northern Europe (2002: 500). This represents 9.6 per cent of the
total workforce.
Western and Southern Europe: breakdown of growth
Total growth
+ 4.1 %
GfK market position in the European countries
+ 39.3 %
Ranking
1
Germany, Croatia, Netherlands, Austria, Switzerland
2
Bulgaria, Romania, Russia, Slovakia, Czech Republic,
Ukraine
3
Belgium, Denmark, Poland, Portugal, Spain, Turkey
4
France, Greece, Italy, Hungary
5
Sweden
8
uk
10
+ 4.1 %
+ 15.6 %
Organic growth
+ 0.9 %
+ 24.7 %
– 0.8 %
– 0.9 %
Sales
Norway
Operating profit
The western and southern europe region, which comprises
40 subsidiaries in 10 countries, represents the next most
important region for the GfK Group in terms of sales after
Germany. At eur 204.7 million (2002: eur 196.7 million),
GfK increased its sales in this region by 4.1 per cent, of which
0.9 percentage points were attributable to organic growth.
Acquisitions-related growth amounted to 4.1 per cent and is
mainly attributable to the fact that the companies ifr Group
in France, and Significant GfK in Belgium, were only partially
consolidated in 2002, but were consolidated for the full year in
2003. Currency effects reduced sales by 0.8 per cent.
Western and Southern Europe:
key figures
Change
in %
In central and eastern europe, where GfK is one of the
leading providers of market research services with a total of
16 subsidiaries in 14 countries, the Group’s business performance
was once again very successful. Although the region only
accounts for 5 per cent of consolidated total sales, making it
the smallest in the GfK Group, for a number of years it has also
been one of the most dynamic. The double-digit growth rates
in sales and income are purely the result of organic growth.
Central and Eastern Europe:
key figures
In eur million
2002
2003
Sales
196.7
204.7
+ 4.1
19.7
27.5
+ 39.3
In eur million
+ 10.0
+ 13.4
+ 3.42)
Sales
1,787
1,810
+ 1.3
Operating profit
Margin in %1)
Number of employees
Operating profit for the region also rose more sharply than sales
and was up 39.3 per cent from eur 19.7 million in 2002
to eur 27.5 million in 2003. Of this, 24.7 percentage points
were attributable to organic growth primarily due to the positive
trend in the Non-Food Tracking division and to earnings-oriented
measures in the Consumer Tracking and Ad Hoc Research
divisions. Growth from acquisitions accounted for 15.6 percentage
points. The margin increased from 10.0 per cent in 2002 to
13.4 per cent in 2003.
96
At the year-end, 1,810 full-time staff, 23 more than the previous
year, were working in the Western and Southern Europe region.
In total, 35.7 per cent of the worldwide workforce belongs to the
companies in this region.
Operating profit
Margin in %1)
Number of employees
Change
in %
2002
2003
28.5
31.8
+ 11.6
2.6
3.7
+ 42.6
+ 9.0
+ 11.6
+ 2.62)
634
697
+ 9.9
In 2003, the GfK companies in Central and Eastern Europe
increased their sales by 11.6 per cent from eur 28.5 million in
the previous year to eur 31.8 million, of which 20.9 percentage
points were organic growth. Currency effects reduced sales
growth by 9.3 per cent.
Operating profit in the same period rose by 42.6 per cent from
eur 2.6 million to eur 3.7 million. Exchange rates reduced
total profit by 11.7 percentage points. Organic growth amounted
to 54.4 per cent and the margin relating to sales therefore
improved from 9.0 per cent to 11.6 per cent.
Regions
MANAGEMENT REPORT
Once again, the 24.2 per cent fall in operating profit from
us business in organic terms is mainly due to Martin Hamblin
Research. However, owing to the sound profits from v2 GfK,
the margin for the American region rose from 7.7 per cent to
9.2 per cent.
Central and Eastern Europe: breakdown of growth
Total growth
+ 11.6 %
+ 42.6 %
America: breakdown of growth
0.0 %
0.0 %
Organic growth
Total growth
+ 20.9 %
+ 20.4 %
+ 54.4 %
+ 43.5 %
– 9.3 %
– 11.7 %
Sales
+ 36.9 %
+ 85.0 %
Operating profit
Organic growth
+ 0.2 %
– 24.2 %
At the end of 2003, the number of full-time employees was 697,
63 more than at the end of 2002. This corresponds to a 13.8 per
cent share of the worldwide workforce.
– 16.7 %
– 17.4 %
Sales
Operating profit
America: market position improved through acquisitions
In 2003, GfK was represented in America by 3 subsidiaries, all
with headquarters in the usa. These were GfK Custom Research
which was acquired in 1999, a majority holding in Martin
Hamblin Research acquired as at 1 May 2001 and also a majority
holding in v2 GfK acquired as at 1 July 2003.
At the year-end, the GfK Group employed 204 full-time staff
in America, 66 more than at the year-end in 2002. The total
number of staff in America represents 4.0 per cent of the GfK
workforce worldwide.
GfK increased its sales in America in 2003 by 20.4 per cent
from eur 40.4 million to eur 48.6 million. Of this, 36.9 per cent
results from the acquisition of v2 GfK. Currency effects reduced
sales by 16.7 per cent, whilst organic growth rose 0.2 per cent
over the previous year. The unsatisfactory rise in organic sales
growth was largely attributable to the poor business performance
of Martin Hamblin Research.
Asia and the Pacific: strong organic growth
America:
key figures
In eur million
Sales
Operating profit
Margin in %1)
Number of employees
2002
2003
Change
in %
40.4
48.6
+ 20.4
3.1
4.4
+ 43.5
+ 7.7
+ 9.2
+ 1.52)
138
204
47.8
The Asia and Pacific region comprises 15 GfK subsidiaries in
13 countries including Australia, China, South Korea and Japan.
In this region, the GfK Group only operates in the Non-Food
Tracking segment.
In 2003, GfK increased its sales by 14.1 per cent from eur 30.1
million to eur 34.3 million. Currency effects reduced sales by
12.3 per cent. However, at 24.9 per cent, the companies in this
region achieved the highest organic growth of any region where
the GfK Group is represented by subsidiaries. Growth resulting
from the acquisition of Inform Business Development in Australia
amounted to 1.5 per cent.
Asia and the Pacific:
key figures
In eur million
Sales
Nevertheless, GfK achieved a clear increase in its operating
profit in this region as well, which was up 43.5 per cent to
eur 4.4 million (2002: eur 3.1 million). As with sales, the growth
in operating profit was entirely due to the acquisition of v2 GfK.
The weak us dollar reduced operating profit by 17.4 per cent.
Operating profit
Margin in %1)
Number of employees
Change
in %
2002
2003
30.1
34.3
+ 14.1
3.0
5.6
+ 83.5
+ 10.1
+ 16.3
+ 6.22)
355
410
+ 15.5
97
Despite unfavourable exchange rates, the region improved its
operating profit in the reporting year from eur 3.0 million to
eur 5.6 million. This increase was largely attributable to organic
growth. Currency effects reduced operating profit by 11.3 per cent.
The margin also rose markedly from 10.1 per cent to 16.3 per
cent.
Asia and the Pacific: breakdown of growth
Total growth
+ 14.1 %
+ 83.5 %
6. Research and development
GfK aims to offer its clients information and consultancy
services which in terms of methodology and content are
innovative in their field. This was demonstrated this year by
the fact that GfK won an award for the best method paper
at the annual conference of the European Market Research
Association, esomar. GfK is the first organization to have
received this prize in two consecutive years and three times
altogether to date.
Aims and focus for 2003: further developing methods and
technologies
+ 1.5 %
+ 1.6 %
Organic growth
+ 24.9 %
+ 93.1 %
– 12.3 %
– 11.3 %
Sales
Operating profit
At the year-end, there were 410 people employed in the Asia and
the Pacific region, an increase of 55 over the previous year. This
corresponds to an 8.1 per cent share of the worldwide workforce.
The GfK network: further expansion
In 2003, the GfK Group continued to expand its international
network. The following table lists the main activities in 2003.
Company
98
For the GfK Group, innovative methods for processing new
types of marketing surveys and the continuous improvement
of its research instruments constitute strategic goals. GfK’s
research and development projects are generally developed
and implemented in close collaboration with clients, academic
institutions or corporate consultants. The work is carried out
on both a centralized and decentralized basis.
Classification
Business
division
Region/country
Shareholding
GfK Media
Established
Media
uk
100 %
Inform Business
Development
Acquisition
Non-Food
Tracking
Australia
100 %
v2 GfK
Acquisition
HealthCare
usa
51 %
media control GfK
International
Acquisition
Non-Food
Tracking
Germany
51 %
GfK has a central method and product development department
(GfK Methoden- und Produktentwicklung) staffed by 18 statistics
specialists and method experts with responsibility for crossdivisional and particularly complex projects, as well as standard
research methods. In addition, the team advise GfK subsidiaries
on the development of new services and the processing of
client orders using new types of research methods and requirements.
In 2003, GfK had two main focuses: the first, to develop new
research instruments and improve and update the existing range
of instruments; and second, to design and implement hardware
and software for gathering, processing, storing and analyzing
data.
Services: new survey methods
In 2003 the department concentrated on two main areas: the
development of a series of new testing and forecast instruments,
including Concept Challenger Volumatic for predicting sales
volumes, Storetest Plus for analyzing pay-back data and GfK
Brand Simulator, a model using consumer panel data to optimize
marketing mix, and a new electronic process to identify and
avoid incorrectly conducted interviews. The process, which has
been in use at GfK Ad Hoc Services since the third quarter of
2003, enables efficient quality controls to be carried out quickly
during surveys.
Employees
Hardware and software: more user-friendly with extended
functionality and improved efficiency
Data collection methods have undergone a huge change with
the advent of new communication technologies. In 2003, GfK
worked on two new processes in particular.
new forms of data collection technology. In Sweden since
mid 2003, Consumer Tracking has regularly been using a data
collection system which it developed in-house. Known as e-cpo
(Electronic Consumer Panel Online), it gathers information on
the purchasing behaviour of households and individuals by means
of a whole range of electronic technologies such as Internet
applications, Personal Digital Assistants (pdas) and mobile phones.
Tests in Switzerland using a refined system have been underway
since November 2003. The new procedures are all compatible
with aTRACKtive, the production platform also developed by GfK
and now in use throughout Europe.
user-based media research. At the end of 2003, the GfK
subsidiary, Telecontrol Switzerland, which is part of the Media
division, launched a measuring device which it has developed.
Known as MediaWatch, it measures the media consumption to
which consumers are daily exposed.
The device captures data when the survey participants come
into contact with the electronic media of television, radio and
cinema, as well as poster advertising, newspapers, magazines
and other printed matter. Following extensive, in-house testing
the device will be used for the first time in a pilot study of clients
at the beginning of 2004. This innovative technical solution uses
a new approach to media research, which to date has been
media-based and has therefore specialized in specific areas of
the media. This instrument means that for the first time it will
be possible to collect data on media consumption which is
user-based and facilitates an analysis of the overall multi-media
complexity to which people are subjected.
In addition, two of GfK‘s central production and analysis systems
were refined during 2003.
online access to gfk databases. The first of these platforms,
atracktive.web, involves the consumer panel, ConsumerScan,
via which major clients have direct access to GfK’s databases.
In 2003, Consumer Tracking launched an update of the analysis
system which, on the customer side, can be used by a wide
range of users and not just by the market research specialists as
has been the case to date. This allows any member of staff from
marketing, sales and controlling departments to access GfK raw
data at any time for analysis purposes.
MANAGEMENT REPORT
producton system for information from 44 countries.
The second project, startrack, relates to the administration and
analysis of information on electronic consumer goods, for which
the Non-Food Tracking division gathers retail sales data on a
continuous basis. Developed as a top priority during 2002, the
system is designed to take over all internal data management
functions previously carried out via a mainframe, with effect
from 2004. In 2003, the system was refined with the aim of
making procedures faster and more efficient. In addition, work
began on a new system known as startrack Client which in
future will enable GfK clients to have direct access to startrack.
7. Employees
Number of employees: exceeds 5,000 for the first time
As at 31 December 2003, there were 5,066 full-time staff in
the GfK Group. This represents an increase in staffing levels of
3.8 per cent compared to the previous year.
Number of employees in Germany and abroad
Number of employees
(full-time)
2002
Actual
2003
Actual
Change
in %
Germany
1,465
1,459
– 0.4
Abroad
3,414
3,607
+ 5.7
Total
4,879
5,066
+ 3.8
Whilst the number of staff employed in Germany remained
almost unchanged, the staff complement in GfK companies
abroad rose by 5.7 per cent. This was mainly due to the
acquisition of the pharmaceutical research institute, v2 GfK in
the usa and Inform Business Development in Australia.
Number of employees
by region 20031)
in %
Full-time
Germany
29
1,459
Northern Europe
10
486
36
1,810
14
697
4
204
America
Total
8
410
1001)
5,066
99
Consequently, staffing levels grew most in America with an
increase of 47.8 per cent. As at 31 December 2003, 204 people
were employed in the region compared to 138 people in 2002.
The number of staff in Asia and the Pacific rose by 15.5 per
cent to 410 (2002: 355) mainly due to the expansion of business
activities in China. Growth of 9.9 per cent in Central and Eastern
Europe, which had 697 employees (2002: 634) at the year-end,
was primarily the result of expanding GfK’s own interviewer
network in Turkey.
management guidelines for all management staff. The purpose of
these is to ensure that the aims and responsibilities of all staff
with managerial responsibility are based on globally harmonized
general principles.
In September 2003, the Excellence team comprising managerial
staff from various countries, presented a concept for the
guidelines to the Management Board. Together with Personnel
Services, selected members of the Excellence Team have started
work on deriving guidelines from the concept and preparing
for implementation in 2005.
Number of employees by division 2003
in %
Full-time
Consumer Tracking
16
829
Non-Food Tracking
30
1,517
7
328
34
1,706
Media
Ad Hoc Research
HealthCare
4
228
Other
9
458
Total
100
5,066
Of the business divisions it was HealthCare, which showed an
above-average rise in staffing levels of 36.5 per cent to 228
employees (2002: 167). In the Non-Food Tracking division the
number of staff rose by 8.8 per cent and now comprises 1,517
people (2002: 1,394). This is due to the expansion of business in
China and the acquisition of the retail research division for the
entertainment segment of media control GfK International,
Germany.
Staff turnover: a marked drop
The rate of staff turnover in the GfK Group, expressed as the rate
of notices given by employees to the total number of employees,
was 7.7 per cent in 2003 (2002: 9.1 per cent). In Germany it
was just 2.4 per cent compared with 3.6 per cent in 2002. This
indicates a clear fall compared with the previous year.
Management Guidelines: global harmonization
For 3 years, the Management Board has been appointing the
members of what is known as the Excellence Team. This group
was tasked with working on a particular strategic project as part
of a programme for promoting high-fliers. Since compulsory new
Corporate Values were developed and implemented for all staff
in 2002, one of the aims in 2003 was to develop a basis for
100
Human resources strategy: cross-border cooperation
In recent years the GfK Group has grown considerably, particularly outside Germany. A key focus for Personnel Services in
2003 was therefore promoting and increasing the degree of
international cooperation in the area of human resources. With
an international group of personnel managers, GfK has been
working on a common human resources strategy, based on
the overall strategy of the GfK Group and the Corporate Values.
The strategy is to be adopted by the Management Board in 2004.
Personnel department audit 2003: optimizing procedures
In summer 2003, Personnel Services commissioned a leading
consultancy company to undertake an audit of the structures and
procedures in Personnel Services.
The primary aim of the human resources audit was to ascertain
whether there is any potential for optimization in the Personnel
Services division and, if so, where. When sap/r3 was introduced
in 2002, the procedures in place at the time were, as far as
possible, transferred to the new system. The audit therefore
focused primarily on checking whether the working procedures
in Personnel Services were optimally suited to the sap system
with regard to efficiency and adequacy. A further aim of the
audit was to obtain recommendations on the effectiveness of
services offered by the human resources department.
With a view to further optimizing procedures, GfK and the
consultancy company jointly drew up and implemented a
restructuring plan.
Organization and administration
8. Organization and administration
With its business model as a ‘pure’ market research company,
GfK offers information services to industry, retailers, the
pharma sector, media and service providers. The company has
consistently adapted its organization and administration to meet
the demands of worldwide growth. This includes decentralizing
all services to ensure optimal business performance in the
individual companies. In addition to the parent company, the
GfK Group comprises 161 subsidiaries and participations.
GfK ag acts both as a holding company and as an operating
unit. The Group has its head office in Nuremberg. In the GfK
Group annual accounts GfK has fully consolidated 92 majority
holdings. Additionally, 20 significant associated companies
have been included in the annual result according to the equity
method (see page 121 in the Notes to the consolidated financial
statements).
Management Board and divisional executive bodies
The company is headed by the Management Board which
comprises a total of six members. The Chief Executive Officer
(ceo) is responsible for Strategy, Investor Relations, Internal
Audit, GfK Methoden- und Produktentwicklung, Public Affairs
and Communications, as well as GfK Data Services/Business
Solutions & Processing. The Chief Financial Officer (cfo) is
responsible for Financial Services, Personnel Services and
Central Services.
GfK is organized on a matrix basis. Each Management Board
member is responsible for certain companies and a particular
business division. HealthCare and Consumer Tracking come
under the responsibility of the same Management Board
member. The managing directors report directly to the Management Board members responsible for their company.
Each business division has its own executive body known
as Board, comprising the responsible Management Board
member and selected managing directors who can call upon a
number of specialist teams. The task of the Board members is
to develop global divisional strategies and to allocate resources
for international projects.
Sales and operating profit are collated along regional and
divisional lines. Hurdle rates for operating profit in relation
to sales are applied to each business division as target and
management indicators. These are used as set targets at
divisional level. The Chief Information Officer (cio) is responsible
for advising the Management Board on worldwide harmonization
MANAGEMENT REPORT
of it Services – primarily on the standards for optimizing
procedures and costs for the purchasing of hardware and
software and organizing the it network. The cio reports
directly to the ceo.
New: independent HealthCare division
Due to the then imminent acquisition of a majority holding in
v2 GfK in the usa, in mid-2003 GfK had already started to report
HealthCare as a separate division at the beginning of the year.
The acquisition of a majority holding in v2 GfK in the usa was
the reason for establishing HealthCare as a new, independent
business division. In recent years, GfK has acquired and
developed business interests in this area. The most significant
measures include:
the takeover in 2001 of Martin Hamblin GfK with activities in
the uk and the usa,
the takeover in 2001 of GfK Animal Health uk which specializes
in the English veterinary market,
the splitting in 2002 of GfK HealthCare Deutschland and gpi
Kommunikationsforschung from i+g (50:50 joint venture with
Infratest nfo) with business focus on Germany and
the acquisition in 2003 of a majority holding in the American
company v2 GfK providing an increased presence in the
world’s largest pharmaceutical market.
GfK also holds a 50 per cent share in iha·ims Health in
Switzerland and a 35 per cent share in m2a in France.
This division therefore achieved a level of sales which allowed
it to carry out its own reporting. Management activity in this
division will concentrate on ongoing integration of the new
companies and the networking of HealthCare activities worldwide.
Centralized services
GfK ag’s Group Services comprises the following centralized
administrative departments:
Investor Relations, Public Affairs and Communications, and
the Financial Services department, which includes Group
Accounting and Group Controlling. All these departments have
global responsibility.
the Financial and Operational Accounting sections of the
Financial Services department, Central Services and Personnel
Services which are responsible for most of the companies in
Germany.
101
Outside Germany, these functions are the responsibility of the
relevant departments at the individual GfK companies.
Sub-holdings
As at the year-end, GfK had further expanded its collaboration
with the npd Group to cover new regions. Organizational
changes have paved the way for further improvement in global
services. In future three regionally based holding companies
and a Coordination Board will regulate international collaboration:
1. for Europe, Asia and the Middle East (share of the GfK Group
95 per cent)
2. for the usa, Canada and Mexico (share of the GfK Group
25 per cent)
3. for Latin America, which primarily includes Brazil, Chile and
Argentina (share of the GfK Group 65 per cent).
The Coordination Board is responsible for developing global
concepts for company policy and services as well as coordinating
relationships between clients and partner companies within each
regional holding.
The GfK Group primarily maintains additional sub-holdings in:
Austria for most of the Central and Eastern European GfK
companies
Switzerland for the companies in the iha GfK Group and
Singapore for all companies in the Non-Food Tracking division
in Asia and the Pacific, excluding Japan.
9. Purchasing
As an international market researcher, most of GfK’s purchasing
concerns raw data and additional services. This involves
anonymous data provided by retail companies and private
individuals. These are either periodically retrieved in electronic
form or – depending on the respective task in hand – gathered
using other methods such as surveys or studies.
102
purchase of other goods. Leases and service level agreements
are regularly checked and re-tendered and the price and
quality of the services and materials purchased are constantly
monitored.
10. Environmental protection
In line with its policy of positive action, GfK already takes
environmental protection into account when procuring office
equipment and work materials.
It is the responsibility of each GfK employee to be careful
and thrifty in their use of the company’s material resources.
The GfK environmental officer and the relevant departments
such as Purchasing and it Services support employees in this
endeavour. GfK seeks to comply with both its own and statutory
environmental standards in the disposal of work materials and
office equipment.
11. Corporate communications and
marketing
In 2003, GfK actively promoted and improved its marketing and
corporate communications.
Marketing: reinforcing direct contact with the client
As an information service provider supplying services to various
companies across all sectors in the consumer goods and service
industries, the conventional forms of advertising and direct
marketing are of secondary importance to GfK.
What is important is regular contact with clients, particularly
through special events. In general, these are organized on a
decentralized basis by GfK companies and divisions.
Notable international events included:
GfK’s Annual Conference in Nuremberg on the theme
“Innovation: top or flop – the consumer decides” attended by
around 800 delegates
In the traditional purchasing markets, GfK is only involved to
any great extent in the it sector.
the Ad Hoc Research Summit in Paris with over 100 clients
from throughout Europe
High technical standards for data retrieval and processing enable
GfK to guarantee superior quality combined with cost efficiency.
Alongside these technical measures GfK has laid down relevant
guidelines to optimize the procurement of data as well as the
the GfK Annual Telecom Industry Meeting, organized each
year in London by the Non-Food Tracking division, with around
100 clients from the telecommunications industry in Europe
the first European Domestic Appliances Conference, organized
in Milan by the Non-Food Tracking division and attended by
around 90 clients
Risk
the Imaging Summit, organized every two years in Nuremberg
by the Non-Food Tracking division, with 300 clients from the
photographic industry and retail industry worldwide.
In addition, in 2003 the “Academies” in the Consumer Tracking,
HealthCare and Ad Hoc Research divisions offered their clients
over 20 specialist events covering special instruments and
services. The GfK Group and the individual companies also took
part in numerous conventions, specialist conferences and trade
fairs delivering specialist lectures and company presentations.
pr: reaching a wide audience
The focus of the pr work of the GfK Group comprised traditional
press releases on business performance, acquisitions and other
topics particularly relevant to the financial community. Here,
Public Affairs and Communications worked closely with Investor
Relations (for further details see page 26 et seq.). GfK also regularly
issued press releases on the findings of GfK surveys. These
include GfK’s consumer climate surveys which are published
monthly in Germany and the uk as well as the findings of international surveys. With almost 10,000 articles in Germany alone
covering GfK or its surveys or quoting them, the level of press
coverage rose by 42 per cent compared to the previous year.
GfK’s website is also becoming increasingly popular with a wider
audience and visits increased by 26 per cent with a daily average
of around 2,300 hits in 2003.
Corporate image: an expression of company culture
The GfK Group has visibly altered its corporate image in recent
years. The climax of this process was the redesign of the GfK
logo. The Management Board took the decision at the end of
2002 and began implementing the corporate design for the new
logo in February 2003. This changeover process has been largely
completed in Germany. In order to keep down the costs of the
transition, companies outside Germany were allowed a generous
timescale for the changeover.
MANAGEMENT REPORT
12. Risk
The GfK Group is the No. 5 market research organization worldwide. The Group intends to carry on taking every opportunity
to improve its market position through continuous growth.
However, seizing opportunities also entails running risks. By
identifying risks at an early stage, assessing such risks and
managing them in a professional manner, GfK is in a position
to make commercially sound use of the opportunities which
present themselves.
All aspects of risk management are incorporated in a comprehensive early risk warning system, which GfK has operated for
several years and is constantly developing. Once again this year,
as in the past, the Group’s auditors have confirmed the effectiveness of this system.
Risk management system: identifying and assessing risks
principles of risk management policy. As a basis for
positive risk management the GfK Group applies principles of
risk management policy with which the risk management
systems in all areas must comply. The main principles are:
You can only manage known risks:
As a result of constantly changing relations and demands,
identifying risks has become an ongoing task which is firmly
integrated into daily working practices. Risk management
acts as an early warning system enabling potential damage to
business growth to be averted through appropriate measures.
The flat organizational structure at GfK and the culture of open
communication also facilitate transparency and the management
of potential risks.
Risks are systematically assessed:
Not all risks are equally serious. To ensure efficient risk management, any identified risks must be systematically evaluated as
to the potential damage they may cause and the probability of
them occurring. The aim of risk assessment is to discover which
risks might fundamentally jeopardize the success of the company. To do this, quantitative and qualitative threshold values
are established. In addition to the extent of a risk, it must also be
assessed whether the risk might actually jeopardize the existence
of the company. Applying threshold values defines when such a
risk to the GfK Group may occur.
Risk management is everyone’s responsibility:
It is the responsibility of each employee to avert potential
damage to the company. In addition to a fundamental knowledge
of the risk management system, this requires a high level of
103
risk awareness among staff. Relevant information materials and
workshops have been implemented with the aim of raising risk
awareness.
responsibilities and functions. As part of its overall
responsibility for the risk management system, the Management
Board appointed a risk management committee to continually
extend the Group’s arrangements for efficient and feasible
risk management. This body is responsible not just for the
planning and ongoing methodical development of the system,
but also for ensuring its functionality. Another core task is
identifying Group-related risks and reporting to the Management
Board and Supervisory Board on the current risk situation in
the Group.
As a result of the Group’s decentralized structure, direct
responsibility for early identification, management and communication of risks rests locally with the operational managers of
the individual GfK companies. Risk management coordinators
in the companies ensure that the central regulations are applied
in the respective organization and promote risk awareness. A
risk owner is appointed for each identified risk, whose job it is
to make and implement the necessary decisions to overcome
the risk.
processes. Thanks to its integrated risk management concept,
the GfK Group is able to ensure complete and comprehensive
risk identification. The concept covers the identification and
management of strategic and operational risks at the level of the
individual GfK companies as well as at regional, divisional and
Group level.
Company level
Group level
In addition, comprehensive planning, forecasting and reporting
instruments for early risk identification have also been in place
at the GfK Group for many years.
documentation and monitoring. All principles, processes and
responsibilities for the GfK Group risk management system are
set out in the Group Handbook. Each member of staff can access
the current version via the Intranet.
The Internal Audit department regularly monitors the concept
behind and functionality of the risk management system. Risk
management is also assessed as part of all company audits
both in Germany and abroad. The findings from such audits,
combined with advice from the auditors, assist ongoing improvement of the system for the early identification of risks.
Risk situation:
company growth not affected
economic risks. Slow economic growth continued worldwide
throughout the period under review. However, despite this
trend, the GfK Group once again produced successful growth
and exceeded its targets for sales and total income.
Bad debts due to client insolvency remained at a low level and
did not affect the liquidity position of the Group.
GfK anticipates that it will achieve an increase in sales which will
outstrip growth in the market research sector (see also Outlook
on page 109 et seq.). GfK currently foresees no fundamental
risks from the economic situation which might cause any marked
drop in orders or fall in sales at Group level.
GfK integrated
risk management
system
Divisional level
104
The core of the system is the annual risk inventory prepared
by the risk management coordinators which covers the development of the risks identified in the previous year and identifies
newly emerged risks. These are assessed as to their probability
and level of potential damage so that countermeasures can be
specified. If new risks should arise during the year or any major
change occur in the risk situation, ad hoc reporting ensures that
the Management Board is informed immediately.
Risk
sector risks. The sustained weakness in the global economy
has again confirmed that the market research sector is less
prone to cyclical fluctuations. It is also evident that, with regard
to growth in sales and total income, the GfK Group is well
positioned even in times of difficult economic conditions.
Moreover, as GfK operates worldwide and acts as a full-service
provider, it is able to compensate for fluctuations in orders in
a particular region or division. The division-related risks detailed
below are therefore unlikely to fundamentally jeopardize business
growth in the GfK Group.
The difficulties in the print media industry caused a drop in sales
in the Media division during 2003. It was not possible to offset
this fully through long-term contracts for tv and radio ratings
research with fixed volume orders. Advertising activities in the
print media will be boosted when the economy recovers and GfK
is assuming that the demand for its services will increase again
in this sector. Major sporting events such as the Olympic Games
in Athens and the European Soccer Championship in Portugal
offer the prospect of further impetus.
In the Consumer Tracking division, although the overall income
situation again improved considerably in 2003 as a result
of extensive cost-cutting programmes, the market situation
remains difficult partly because of the pressure of international
competition. Nevertheless, GfK is convinced that in the medium
to long-term this division will be a mainstay of its financial and
customer-related strategic growth.
With the establishment of the HealthCare division the GfK Group
is set to further expand its market share and the possibility
of associated risks cannot be excluded. However, longstanding
knowledge of the sector and experience in integrating new
companies into the Group should help to minimize potential risk.
The formation of an internationally staffed HealthCare committee
was fundamental to optimizing GfK’s range of services and
establishing the HealthCare area as a profitable, forward-looking
division.
In all divisions, the ongoing process of concentration among
clients through mergers and company takeovers continues. This
has resulted in the marketing budgets of some clients being
reduced and this has been offset by increased acquisition of
new clients and expanding services. Furthermore, the changed
market conditions have produced new major clients. However,
MANAGEMENT REPORT
GfK’s overall reliance on major clients remains modest. The
share of worldwide Group sales attributable to the top 10 clients
has reduced slightly from 16 to 15 per cent.
operating risks. Cost pressures on the GfK companies have
continued to intensify. With discount competitors offering
services at dumping prices to gain a foothold in the market,
clients proved increasingly price-conscious. At the same time,
there was an increasing demand for cost-intensive consultancy
services and integrated data solutions. To remain competitive
and succeed in the market, GfK responded to these developments
with continuous process optimization, cost-cutting programmes
and a high degree of innovation throughout the Group. GfK also
took account of the increasing demand from its international
clients for information on global markets, by targeted expansion
in the relevant markets and regions.
GfK uses a system of regular reports to monitor major innovative
projects which are currently being implemented. There are
currently no identifiable material risks from research and development activities.
Operating risks are restricted by the fact that no more than
10 per cent of consolidated sales is transacted with individual
clients in any single sector. As the GfK Group has an international presence, there are also no regional risk-related
commitments.
financial risks. The financing of the GfK Group is essentially
provided by GfK ag. In addition, some subsidiaries provided
GfK ag with loans with a small overall volume which GfK is
successively repaying. Overall, net indebtedness of the GfK
Group amounts to eur 24.9 million, down from eur 39.6 million
in the previous year.
Half way through 2003, GfK ag took advantage of low interest
rates to change its variable rate liabilities to banks in the
medium term to fixed rates. This created a safer low-rate basis
for calculation. In 2003, GfK ag also increased the number
of banks it works with so that its short-term credit facilities
from banks now amount to a three figure million sum. At the
year-end, GfK had used less than 10 per cent of these credit
lines.
105
Besides the option of borrowing, GfK ag has access to authorized
capital of 8.2 million in no-par shares to increase the equity
base. Further liquid funds are available from the Group.
Financing is therefore available on a broad and secure basis.
There are currently no risks in this area.
Since 65 per cent of consolidated sales was generated by
companies in the Euro zone, the risks from currency effects
within the GfK Group are limited. The weakness of the dollar
and the poor exchange rate for the yen as well as other
currency effects over the course of 2003 have reduced growth
in sales and operating profit for the Group by 3.3 per cent.
legal risks. Many countries are trying to restrict apparent
self-employment. This would mean that GfK’s interviewers and
other freelance workers would be subject to compulsory social
security payments, which would increase costs. GfK is responding with appropriate measures mainly involving adapting terms
of employment to these changes. Legal proceedings initiated in
Austria were settled in favour of GfK.
At the present time, there are no significant risks in respect of
pending legal actions or compensation claims.
GfK is currently working on optimizing the insurance cover for
all GfK companies worldwide.
risks of acquisitions. The acquisition of new companies and
their integration into the Group is always associated with risks.
GfK prepares for such risks by extensive due diligence checks
prior to any acquisitions and acquisition supporting measures.
The specialist team that carries out these tasks can call on
outside consultants when necessary. Comprehensive integration
plans facilitate the smooth integration of new companies into
the GfK Group.
The Supervisory Board of GfK ag actively monitors acquisitions
through regular reports presented in its meetings. In 2003 it also
set up a Mergers and Acquisitions Committee.
106
it and other risks. The security and constant availability
of data are essential prerequisites for a company selling
information-based products. For that reason, GfK has taken
extensive precautions over the years to guarantee high standards
of it security. In addition, the Group conducted a comprehensive
security check during 2002 and 2003. Based on this, new
compulsory it security standards will be drawn up for all
companies in the GfK Group in 2004. The Chief Information
Officer (cio) coordinates and optimizes it strategies and it
security concepts throughout the Group.
GfK continually monitors risks arising in the it sector as part of
its disaster recovery plan.
There are currently no identifiable material it or other risks in
the GfK Group.
assessment of overall risk. Assessment of the overall risk
situation has shown that the risks are limited and manageable,
and do not materially affect the assets, financial position and
profit or loss of the GfK Group. No lasting damage to business
growth of the Group is currently anticipated due to individual
risks or the accumulation of risks.
The Group’s high equity ratio of 40.7 per cent contributes to a
considerable reduction in the overall risk position, which remains
almost unchanged from the previous year.
No events occurred after the reporting date to permanently alter
the risk situation of the GfK Group.
In summary, there are no risks at present which could jeopardize
the continued existence of the Group.
13. Major events since the 2003 financial
statements
On 16 February 2004, negotiations for the tv research
contract with the Arbeitsgemeinschaft Fernsehforschung
(Television Research Partnership) for Germany were successfully concluded. The fifth consecutive agreement between
agf and GfK will run for at least seven years from 1 January
2005 to 31 December 2011. In addition, the parties to the
contract have agreed an option to extend the contract for a
further two years. The total value of the contract amounts to
more than eur 90 million.
Outlook
The GfK Group has acquired the business of arbor inc. usa
effective retroactively from 1 January 2004. The newly named
company, GfK Arbor, provides clients with ad hoc research
services with particular emphasis on communication and market
research and carries out tracking surveys on brand equity and
value, market segmentation and corporate image evaluations.
With 92 employees, the company generated sales of usd 24.9
million in 2003.
On 24 February 2004, the Supervisory Board extended the
contract of Heinrich A. Litzenroth, the Management Board
member responsible for the Ad Hoc Research division, for
a further five years. Litzenroth joined GfK in 1978 and was
appointed to GfK’s Management Board in 2000. Since taking
over responsibility for Ad Hoc Research, he has played a pivotal
role in accelerating the internationalization of the division.
14. Outlook
Economic conditions
the economy in general. According to economic research
institutes, the global economy will pick up in 2004 and then
remain stable in 2005. Many governments are adopting
expansionist financial policies to stimulate the economy. The
optimism of employers, investors and, ultimately, consumers
is set to grow. Global growth depends mainly on economic
growth in the usa. The accelerated growth rate observed during
the second half of 2003 is likely to continue. However, even
an economic downturn during 2004 would hardly affect the
powerful influence of the usa on overall economic growth. Such
a development is based on two assumptions. Firstly that there is
no renewed deterioration in the international political situation,
and secondly, that there are no marked currency fluctuations.
In addition to the usa, south east-asia and the countries
joining the european union in May 2004 will see a boom.
Once again, no dynamic upturn is expected in germany in 2004.
However, according to experts, two factors may contribute to
positive growth. Firstly, following years of caution, demand for
investment is rising again in 2004, secondly, possible growth in
private consumption resulting from tax cuts.
MANAGEMENT REPORT
Some major sporting and political events in 2004 may provide
economic impetus and give rise to an increase in consumption.
These include the Olympic Games in Greece, the European
Soccer Championship in Portugal and the presidential elections
in the usa. For the media industry, which has been hard hit by
the weak global economy, these events could mark the hoped-for
turnaround.
market research sector. Despite slow economic growth
over the past two years, the market research sector remains a
growth market with above-average potential. Factors driving
growth are:
Competition among global companies – over the past decade,
political, economic and technological developments have greatly
accelerated globalization of providers in traditional goods and
services markets. This has meant that pressure from competition
between local and global companies and brands entering new
markets has increased.
smes require more information – the number of medium-sized
and smaller companies which are using the new communications
technologies regionally, nationally and globally is rising.
Consequently, their need for expertise in market research and
marketing is also increasing.
Innovation-related business and client potential – the new
communication and information technologies combined with
scientific progress have given the market research industry
added impetus. This is reflected in a large number of markets
for new types of products and services in, for example, telecommunications, biochemistry and gene technology.
New business potential in the emerging markets – growth
opportunities are resulting from political and economic
liberalization and democratization trends worldwide. This
involves, in particular, the emerging markets of Central and
Eastern Europe, Asia and the Pacific as well as Latin America.
Outsourcing of market research - more and more companies are
paring down their market research departments to a minimum
and buying in the services of professional providers instead.
Experts forecast sector growth of three to four per cent in the
market research industry in 2004.
107
Employees
GfK expects that with no change in the scope of consolidation
the number of employees will slightly increase in 2004.
Essential personnel measures include optimizing the organizational structure and procedures in staff management and
consistently implementing the sap standards. Another important
step will be to develop and launch GfK’s global hr strategy
throughout the Group’s worldwide network of companies.
A working party of personnel managers and members of the
Excellence II team will define the new GfK management
guidelines over the next two years (see p. 100), communicate
these throughout the GfK network and promote their gradual
adoption in daily working practices, using the appropriate
instruments.
Research and development
Over the coming years, research and development will focus
on fine-tuning procedures for merging and integrating data
from different sources and optimizing the measuring and
forecasting quality of such procedures. In addition, high priority
will be given to the ongoing development of electronic metering
technology and analysis software. GfK intends to use technical
innovation to enhance the reliability, precision and efficiency
of data collection processes relating to consumer habits in terms
of consumption, use and purchasing behaviour. Developing
and optimizing the information systems and analysis methods
available to clients, which provide ever more flexible analysis
options through direct access to GfK’s databases, constitute
another priority for GfK.
Organization and administration
In 2004 and 2005, GfK will continue to work on meeting the
deadlines specified in the German Corporate Governance Code
with regard to the publication of annual and interim reports.
Preparations are also under way to change the accounting in
accordance to us gaap in line with the rules of the International
Financial Reporting Standards (ifrs).
108
Non-Food Tracking will continue its preparatory measures for
expanding the division’s activities in South America. The
HealthCare division is giving top priority to the harmonization
and integration of the various service systems used by the
companies in the GfK network.
Purchasing
With regard to it, the GfK Group will progress the ongoing
harmonization and benchmarking processes relating to the
acquisition of hardware and software and the content of
service level agreements. GfK is consistently implementing
the optimization process throughout the entire Group.
Corporate communications and marketing
Activities relating to the continued development of internal
and external communications instruments will be given high
priority in 2004 and 2005. A focal point will be the completion
of the new Intranet, with changes to the navigational structure,
functions and design. This includes, in particular, improving
the offering of electronic media for internal information
purposes and setting up an archive, providing all GfK companies
with access to templates, pictures and recommendations for
designing websites, brochures and other communication tools.
Another project centres on developing a concept for a new
GfK customer magazine and starting the publication process.
All of the business divisions plan to extend their current
programme of client events.
Investment and financing
In 2004 and 2005, GfK will continue to put all its efforts into
maintaining its top position as a leading innovator. Central to
this are the further development of pioneering instruments and
methods and the consistent application of the technology
available within the GfK Group. Capital expenditure of eur 21
million and eur 20 million is planned for 2004 and 2005
respectively. As in previous years, this figure does not include
financial investment to expand and extend the international
network, expenses for the establishment and expansion of
panels, or the costs of modifying and enhancing production and
evaluation software, which are charged directly to expenses as
“soft facts” at the GfK Group (see page 90).
Outlook
An additional capital requirement is anticipated only in
connection with the financing of acquisitions. As before, GfK
aims to match this with the relevant periods by using its free
cash flow and existing credit lines. With authorized capital of
8.2 million no-par shares, GfK also has sufficient self-financing
capacity.
Risks
The risk assessment carried out as part of the risk inventory
for 2003 has not revealed any risks which may jeopardize the
future existence and further development of the GfK Group.
As a result, the GfK Group is in a position to consistently exploit
any market opportunities on the basis of a risk-aware approach.
The individual short and medium-term risks identified in the
monthly reporting are carefully monitored and every effort
is made to find immediate solutions to eliminate these. GfK
assumes that there are no risks which could materially affect the
Group’s business development.
GfK Group: corporate growth
GfK has had a good start to financial year 2004. By the end of
February, it had already invoiced or posted 48 per cent of this
year’s sales target as existing orders or incoming orders. This
figure is slightly higher than that of the previous year which was
47 per cent.
In 2004, the GfK Group intends to once again increase both sales
and total income and outperform the market research sector. With
no change in the scope of consolidation, the Group forecasts
sales of eur 630 million from organic growth, which represents
an increase of 5.8 per cent.
On the basis of the full consolidation of the sales of GfK’s new
subsidiary, GfK Arbor, from 1 January 2004, the sales target has
been revised upwards by a further eur 20 million to eur 650
million. GfK expects to further increase consolidated sales with
the acquisition of additional companies.
The GfK Group is also aiming to increase ebit including income
from participations once again. The growth rate here is set to
outstrip that for organic growth. The target margin, that is the
ebit including income from participations in relation to sales, is
just over 12 per cent.
MANAGEMENT REPORT
Business divisions: optimization, integration and growth
GfK expects a rise in sales and total income for all business
divisions. With the exception of the acquisition of GfK Arbor in
the Ad Hoc Research division and the HealthCare division, the
following explanations are limited to statements about organic
growth.
In detail, the development GfK expects at the divisions is as
follows:
In the consumer tracking division, GfK expects a sales increase
of over 3 per cent and a margin of around five per cent. The
aim is to achieve the increase by expanding and optimizing its
business performance in organic terms.
In the non-food tracking division, GfK anticipates a sales
rise of over 6 per cent and an increase in the margin to 22 per
cent. The GfK Group is enhancing its future growth potential by
setting up activities in Latin America. The division is benefiting,
in particular, from the innovative drive and dynamic growth of
the consumer technology markets. Accordingly, GfK intends to
give top priority to the expansion of its service offering in this
segment.
The long-term tv and radio ratings contracts provide a sound
order basis in the media division. Growth in the ad hoc media
research business in the year under review will depend on
the extent of the recovery in the print media market, which has
been weak for the past three years. There are the first signs
of an improvement in this business segment and GfK therefore
assumes that sales will be up by around 2 per cent, with an
improvement in the margin of one percentage point to 13 per
cent.
Given the global economic upturn, GfK expects a sales increase
in organic terms of 3 per cent in the ad hoc research division.
In addition to organic growth, the acquisition of GfK Arbor will
result in a sales increase of around eur 20 million. Sales will
therefore be up by over 12 per cent and the margin will exceed
7 per cent.
In the healthcare division growth in sales of more than 30 per
cent and an increase in the margin to around 13 per cent are
expected as a result of the acquisition of majority shareholdings
in various companies.
In the other division, GfK is expecting sales to be down by
eur 2 million and negative income. The reason for this is the
further reduction in data collection services for third parties.
The costs associated with switching to ifrs accounting have
not been taken into account.
109
Strategy: exploiting market potential, continued expansion
Two of the main strategic aims of GfK are the expansion of
its business in new countries and regions and the extension of
services to provide a wide-ranging offering, tailored to the
changing requirements and demands of clients. Since its ipo in
1999, the GfK Group has made significant progress towards
achieving these aims and creating the basis for future success.
In 2004, priority will be given to the following aims:
consolidating and expanding the us market presence.
Following its ipo in 1999, GfK established itself in the usa, the
biggest individual market research industry in the world, and
systematically expanded its position in this market. GfK’s us
subsidiaries, GfK Custom Research, v2 GfK, Martin Hamblin
Research and the new GfK Arbor are forecast to generate sales
of just over usd 110 million in the usa in 2004. This means
that GfK is among the top 15 providers in the biggest national
marketing research market in the world. It is expected that GfK
will achieve 14 per cent of its overall sales in this key market in
the current financial year.
rapid expansion of non-food tracking business in south
america. In 2002, GfK acquired a minority shareholding in
Indicator GfK in Brazil. This year, a key activity will be to expand
the Non-Food Tracking business in this region.
harmonized, integrated services. Over the past two years,
GfK has systematically expanded its HealthCare activities.
Following the acquisition of us-based v2 GfK, the Group set
up a new division. The most important task in 2004 will be
to harmonize the range of services, while at the same time
effectively expanding the customer relationship management
system on an efficient basis and ensuring its integration.
This applies to the other divisions as well: key account management systems, standardization of services and the further
development of optimized information systems and instruments
based on cutting edge technology for the benefit of clients have
top priority.
divisional expansion strategies. GfK assumes that in 2004
the Consumer Tracking division, which operates throughout
Europe, will once again benefit from optimized workflows
throughout the corporate network and the introduction of the
uniform production system, aTRACKtive. Ad Hoc Research,
Non-Food Tracking and HealthCare are aiming to achieve global
expansion and service targets and will be continuing to exploit
any potential acquisition opportunities. The Media division will
continue to focus its acquisition-related activities on Europe.
110
gradual acquisition and integration strategy. Essentially,
GfK will pursue its gradual acquisition strategy adopted several
years ago. In line with this strategy, GfK generally prefers to
initially acquire a stake of over 50 per cent in a company. The
possible further acquisition of shares in the target company
of up to 100 per cent is already agreed at the time of contract
conclusion for the majority shareholding. The acquisition of
additional shares is linked to the achievement of sales and
income targets. This gradual procedure is aimed at motivating
the management, owners and employees of newly acquired
companies to promote the business of their company and
its integration in the GfK network, thereby minimizing the
acquisition-related risk.
focusing on market research. GfK is confident that as a
company specializing exclusively in market research, it is in an
excellent position. The Group believes that its focus on this
particular service-based business segment gives it a decisive
competitive edge. Accordingly, GfK intends to continue to make
use of any market opportunities arising in this segment which
focus on providing services, and further expand its position in
the market.
FINANCIAL
S TAT E M E N T S
FINANCIAL STATEMENTS
FOR THE GfK GROUP
112 Consolidated income statement
113 Consolidated balance sheet
114 Consolidated funds statement
115 Changes in consolidated shareholders’ equity
116 Notes to the consolidated financial statements for 2003
116
General information
116
Methods of consolidation
116
Currency conversion
116
Accounting and valuation methods
120
Scope of consolidation and major
acquisitions
121
Notes to the consolidated income
statement
125
Notes to the consolidated balance sheet
126
Consolidated fixed assets schedule
132
Proposed appropriation of profits
137
Segment reporting
138
Pro forma statements in accordance with sfas 141
139
Changes since the previous year
139
Number of employees
139
Total remuneration and shares of the Management
Board and Supervisory Board
140
Supervisory Board
141
Management Board
141
Declaration on the Corporate Governance Code
142
Shareholdings of the GfK Group
148 Auditors’ report
Consolidated income statement
for the period 1 January to 31 December 2003 in eur’000
Sales
2002
23., p. 138
559,373
595,282
– 394,831
– 402,585
164,542
192,697
– 117,287
– 125,412
23., p. 138
47,255
67,285
1., p. 122
– 3,627
– 925
43,628
66,360
6,378
3,108
50,006
69,468
Cost of sales
Gross income from sales
Selling and general administrative expenses
Operating income
Other income less other expenses
ebit before income from participations
2003
2., p. 122
Net interest income
3., p. 122
– 2,329
– 2,020
Net other financial income
4., p. 123
– 2,396
– 1,179
45,281
66,269
– 15,277
– 25,208
30,004
41,061
Minority interests’ share of total income
– 4,331
– 7,739
25,673
33,322
0.98
1.28
Result from ongoing business activity
Taxes on income and earnings
Earnings per share, undiluted (in eur)
The Notes below form an integral part of the consolidated financial statements.
5., p. 123
6., p. 125
Consolidated balance sheet
F I N A N C I A L S TAT E M E N T S
Consolidated balance sheet
as at 31 December 2003 in eur’000
31.12.2002
31.12.2003
Assets
Intangible assets
7., p. 125
163,048
189,136
Tangible assets
8., p. 128
69,718
66,095
Financial assets
9., p. 128
31,040
29,760
p. 126
263,806
284,991
1,519
1,406
Fixed assets
Inventories
Trade receivables
10., p. 129
119,336
125,487
Other accounts receivable and other assets
11., p. 129
16,351
13,197
Securities
13., p. 130
7,350
7,538
45,167
53,241
189,723
200,869
9,324
8,327
6,701
7,816
Total assets
469,554
502,003
of which short-term
197,819
210,352
Subscribed capital
66,872
66,872
Capital reserve
87,098
87,098
Retained earnings
27,357
53,062
Liquid funds
Current assets
Deferred taxes
p. 123
Prepaid expenses
Shareholders’ equity and liabilities
Other comprehensive income
p. 132
177
– 2,887
14., p. 130
181,504
204,145
17,623
25,488
Minority interests
Provisions
15., p. 132
69,636
74,742
Financial liabilities
16., p. 134
72,882
66,607
Trade payables
17., p. 135
Liabilities on orders in progress
Other liabilities
18., p. 135
Provisions and liabilities
Deferred taxes
Deferred income
p. 123
36,318
28,156
56,015
62,677
28,663
30,515
263,514
262,697
6,004
9,088
909
585
Total liabilities
288,050
297,858
of which short-term
203,118
198,178
Total shareholders’ equity and liabilities
469,554
502,003
113
Consolidated funds statement
for the period 1 January to 31 December 2003 in eur’000
Write-down/write-up of intangible assets
Write-down/write-up of tangible assets
Write-down/write-up of financial assets
2003
30,004
41,061
8,995
8,846
15,363
15,931
491
3,508
Change in deferred taxes
– 211
3,831
Income from companies valued at equity, not affecting payment
– 177
– 154
618
– 1,651
Net interest income affecting payment
2,269
1,715
Increase/decrease in provisions
2,427
6,024
577
301
19,622
– 10,715
Profit/loss from the disposal of fixed assets
Other expenses/revenue not affecting payment
Increase/decrease in inventories, receivables and other assets,
not attributable to investment or financing activity
Increase/decrease in liabilities and other liabilities,
not attributable to investment or financing activity
a) Cash flow from ongoing business activity
Cash outflows for investment in intangible assets
– 10,674
524
69,304
69,221
– 9,522
– 9,576
Cash outflows for investment in tangible assets
– 19,051
– 11,390
Cash outflows from the acquisition of consolidated companies and other business units
– 44,088
– 22,481
– 3,913
– 4,270
83
337
Cash outflows for investment in other financial assets
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
Cash inflows from disposal of other financial assets
1,601
476
0
1,404
1,698
2,755
– 73,192
– 42,745
Cash outflows to company owners
– 4,441
– 5,224
Cash inflows from/outflows to minority interests
– 1,703
– 3,011
Net interest income
– 2,269
– 1,715
Cash inflows from the raising of loans
34,692
11,392
b) Cash flow from investment activity
Cash outflows from the repayment of loans
– 23,346
– 17,664
c) Cash flow from financing activity
2,933
– 16,222
Changes in liquid funds affecting payment (total of a), b) and c))
– 955
10,254
Changes in liquid funds owing to exchange gains/losses, scope of consolidation and valuation
– 1,433
– 2,180
Liquid funds at the start of the period
47,555
45,167
Liquid funds at the end of the period
45,167
53,241
114
2002
Changes in consolidated shareholders’ equity
Changes in consolidated shareholders’ equity
for the period 1 January 2002 to 31 December 2003 in eur’000
As at 1 January 2002
No. of shares
(in thousand)
Subscribed
capital
Capital
reserve
Retained
earnings
Difference
from
currency
conversion
26,122
66,872
87,098
6,366
2,814
Market
valuation
of
securities
Difference
from
pension
valuation
Valuation
of
cash flow
hedges
Total
11
– 34
0
163,127
Dividend
– 4,441
– 4,441
Consolidated total income after tax
25,673
25,673
– 241
– 241
Other changes
Other comprehensive
income
As at 31 December 2002
26,122
66,872
87,098
27,357
– 2,623
– 25
34
0
– 2,614
191
– 14
0
0
181,504
Dividend
– 5,224
Consolidated total income after tax
33,322
33,322
Other changes
– 2,393
– 2,393
Other comprehensive
income
26,122
66,872
87,098
53,062
– 5,224
– 3,205
51
0
90
– 3,064
– 3,014
37
0
90
204,145
115
N O T E S T O T H E C O N S O L I D AT E D F I N A N C I A L S TAT E M E N T S 2 0 0 3
General information
The consolidated financial statements of GfK Aktiengesellschaft (GfK ag) include the company itself and all consolidated
subsidiaries (the GfK Group). The statements have been
prepared in accordance with the United States Generally
Accepted Accounting Principles (us gaap) and all figures are
given in eur thousand, unless specified otherwise. The
income statement has been prepared using the cost of sales
accounting format.
Since financial year 2002, the GfK Group has no longer prepared
its consolidated financial statements in compliance with the
accounting principles of the German Commercial Code (hgb).
The us gaap consolidated financial statements are supplemented
by a management report and other required information, so
that, pursuant to § 292 a hgb, the GfK Group is exempt from the
duty to prepare consolidated financial statements in accordance
with hgb.
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.
Pursuant to § 264b hgb, GfK Marketing Services GmbH & Co. kg,
Nuremberg, is exempt from preparing annual financial statements
and a management report, having these audited and disclosing
these in accordance with the provisions for corporations under
§§ 264 et seq.
Methods of consolidation
The annual financial statements of GfK ag and all material
subsidiaries over which control is exercised directly or indirectly
are included in the consolidated financial statements of GfK ag.
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 associated
companies. All other companies in the GfK Group are reported
at acquisition cost.
Capital consolidation is carried out in accordance with the
Statement of Financial Accounting Standards (sfas) 141 on
the basis of the purchase accounting method, whereby the
acquisition costs of the participation are charged against the
parent company’s pro rata share in the newly valued equity
capital of the subsidiary at the time of purchase. Any positive
difference arising on the balance sheet is reported under fixed
assets as goodwill.
pro rata equity capital at initial valuation is added to the equity
book value.
The consolidation on transition from equity valuation to full
consolidation takes place with no impact on income 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.
Shares in the equity capital and in the subsidiaries’ results
attributable to minority interests are reported as a separate item
in the annual financial statements.
Currency conversion
The balance sheets of foreign subsidiaries which were not
prepared in euros are translated into euros at the mean rates on
the balance sheet date in line with the concept of the functional
currency. The annual average euro exchange rate for these
currencies, determined as the mean of all monthly closing rates,
is applied to the income statements of these subsidiaries.
Differences arising between the conversion of assets and
liabilities at the rate on the reporting date and their conversion
at the rate on the previous reporting date, and differences
arising from conversion of the income for the year on the
balance sheet (rate on reporting date) and income statement
(average rate) are recorded in equity with no impact on income.
Differences in exchange rates arising from capital consolidation
are reported in equity within other comprehensive income.
All monetary assets and the short-term non-monetary assets
and liabilities of subsidiaries in countries with high inflation are
converted at the rate on the reporting date, whilst long-term
assets and liabilities along with the equity capital are translated
at historic prices. Any resultant exchange rate differences are
reported and recognized as income on the income statement.
The exchange rates of the main currencies used as a basis for
currency translation in the GfK Group’s consolidated financial
statements are as follows:
Main currencies
Euro mean rate on
balance sheet date
Country, unit of currency
31.12.2002
31.12.2003
2002
2003
usa, usd 1
0.96
0.80
1.05
0.88
uk, gbp 1
1.54
1.42
1.59
1.44
Japan, jpy 100
0.81
0.75
0.85
0.76
68.84
64.11
68.21
65.65
Switzerland, chf 100
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 treated as income. Intercompany results and asset movements are eliminated with impact on the income statement if
they are significant.
Associated companies that are included at equity (one-line
consolidation) are generally included for the first time at the
time of acquisition. The initial valuation takes place similarly
to full consolidation. Any difference on the assets side arising
from offsetting the book value of the participation against the
116
Euro average rate
during reporting period
Accounting and valuation methods
GfK has applied the same accounting and valuation methods as
used in the previous year’s consolidated financial statements.
Any accounting, valuation and consolidation methods that
deviate from German legislation (hgb) are listed in the separate
explanatory notes to the consolidated financial statements in
accordance with § 292 a hgb.
Notes: accounting and valuation methods
Recognition of sales
The method of recognizing sales depends on the nature of
the underlying transaction. For business involving panels, the
GfK Group recognizes its sales according to the progress pro
rata temporis of the project (proportional performance method).
Business in the Ad Hoc Research division is valued by the percentage of completion method.
In the case of the proportional performance method, 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. Where over 50% of the costs occur in the
following month, the sales are recognized with one month’s
delay.
When applying the percentage of completion method, the sales
are recognized in accordance with the actual progress of the
project. Progress on the project is determined as the ratio of the
actual costs incurred to the costs expected overall for 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 point in time at which
they can be anticipated.
The costs to be included in this calculation comprise all direct
cost of sales and personnel expenses as well as pro rata indirect
costs. Provisions are set up for anticipated losses on orders in
progress when they can be anticipated.
In all other business transactions the completed contract method
is used, according to which sales are only recognized once the
work has been completed and invoiced.
2002
2003
25,673
33,322
0
0
– 4,584
– 3,466
21,089
29,856
0.98
1.28
Pro forma earnings per share in eur
0.81
1.14
Earnings per share (diluted) in eur
0.98
1.28
Pro forma earnings per share (diluted) in eur
0.81
1.14
Plus: personnel expenses (after tax) in connection
with stock-based compensation on application
of apb 25
Less: total personnel expenses (after tax) in
connection with stock-based compensation on
application of the accounting method
based on fair values (sfas 123)
Pro forma consolidated total income
Intangible assets
Software
As a rule, software developed by companies in the GfK Group
is used internally for analyzing and processing market research
data. In some cases, it is destined for external users and was
written specifically to meet user requirements.
Precisely defined portions of the internal costs of software
development are capitalized under fixed assets. Amortization
commences on completion of the software.
In addition to proprietary software, the item software also
includes software acquired for internal use.
Earnings per share
Goodwill
The earnings per share (eps) reported in the consolidated
income statement show the proportion of consolidated total
income which theoretically relates to each share issued.
Goodwill arising from 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.
There is no dilution effect arising from the stock options issued
as at 31 December 2003.
Stock options for employees and executives
of the GfK Group
The GfK Group applies apb (Accounting Principles Board)
Opinion No. 25 and associated interpretations to depict the
existing Stock Option Plan in the consolidated financial statements. According to apb 25, expenditure for employee stock
options with no intrinsic value on the balance sheet date cannot
be recognized.
The following table shows the effects on consolidated total
income and the eps which would have resulted had sfas 123
“Accounting for Stock-Based Compensation” been applied to
all issued options.
Goodwill arising from first-time consolidations prior to 1 July
2001 and that transferred from company financial statements
has been amortized over its useful life until 31 December 2001.
According to sfas 142, such goodwill is no longer subject
to regular amortization after 31 December 2001. Goodwill
arising after 1 July 2001 is also not subject to scheduled
amortization.
The GfK Group checks the valuation of its goodwill once a year
and when triggering events or changed circumstances arise by
making a management accounting valuation which is calculated
as the mean of several valuation procedures.
117
Other intangible assets
Inventories
In addition to other intangible assets this item includes payments
on account for intangible assets. Apart from the payments on
account, the other intangible assets are subject to scheduled
straight-line amortization. The amortization period is governed
by the contract term or the useful life, applying the shorter of
the two periods.
Inventories are stated at acquisition or manufacturing costs, or
fair value if lower. The manufacturing costs are entered at full
cost.
Tangible assets
Tangible assets are valued at acquisition or manufacturing costs,
less cumulative depreciation. Cumulative depreciation includes
scheduled straight-line depreciation up to the balance sheet date
and any extraordinary depreciation recorded. The depreciation
period corresponds to the useful life. Payments on account and
assets in the course of construction are not subject to regular
depreciation.
The GfK Group normally applies the following useful life
periods:
Asset
Software and other
intangible assets
Administrative buildings
it equipment
Cars and other vehicles
Office equipment
Office furniture
Useful life in years
3 to 10
50
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. Non-invoiced
receivables can arise in the valuation of sales.
Securities held as current assets
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 net other financial income on 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.
3 to 5
5
3 to 5
10 to 13
In cases involving a capital lease, the leased asset is capitalized
and a corresponding lease commitment is carried as a liability.
The period of depreciation is equivalent to the shorter of the
contract period and useful life.
Available-for-sale securities
Available-for-sale securities are valued at fair value on the balance
sheet date. Each security is considered individually. These are
securities which are not treated as part of the trading securities.
The GfK Group only shows trading securities under current
assets; all other securities are reported under fixed assets as
available-for-sale securities.
In the case of lasting impairment of value, available-for-sale
securities are written down and charged to income under
net other financial income on the income statement. In the case
of a temporary fall or rise in value, the new valuation of these
securities is reported as other comprehensive income within
equity with no impact on income.
118
Trade receivables
Deferred tax assets
The GfK Group applies sfas 109 “Accounting for Income Taxes”.
According to the asset-and-liability method described in sfas
109, the respective local tax balance sheet is compared with the
us gaap balance sheet and the differences ascertained. Future
tax effects arising from the differences are entered in the form
of deferred tax assets or liabilities. The effects on deferred taxes
of changes in tax legislation are recognized as income from the
date on which the tax legislation is passed.
Deferred tax assets accordingly consist of theoretical tax balances resulting from comparing the us gaap balance sheet with the
local tax balance sheet, and from the theoretical tax advantage
arising from tax loss carryforwards. If it is unlikely that these
theoretical tax credits can be realized, valuation allowances are
applied.
Shareholders’ equity - other comprehensive income
Other comprehensive income contains changes in the Group’s
equity which have no impact on income and do not comprise
contributions by shareholders or dividends paid to shareholders.
They are exchange rate differences arising from capital consolidation and equity valuation, unrealized profits and losses
from available-for-sale securities and components of pension
obligations which are not yet reported as pension expenses, as
well as unrealized profits and losses from derivative financial
instruments.
Notes: accounting and valuation methods
Provisions
New developments in accounting
In principle, provisions are set up when there is an obligation
to a third party which is likely to be enforced and the level
can be estimated reliably. If the obligation contains an interest
portion, the provision will be stated at the present value.
Standard sfas 149, “Amendment of Statement 133 on Derivative
Instruments and Hedging Activities”, was published in April
2003. The Standard relates to sfas 133, “Accounting for
Derivative Instruments and Activities”, and contains supplementary rules and explanations. It applies to contracts entered
into or modified after 30 June 2003. This Standard was taken
into account when reporting the derivative financial instruments
in the consolidated financial statements of GfK.
Provisions for pensions according to sfas 87 are valued in
accordance with the projected unit credit method, in which
future compensation increases are taken into account.
Financial liabilities contain liabilities of a financial nature,
particularly loans from banks and other lenders, liabilities from
capital leases and long-term liabilities from the acquisition of
companies or business units. They are stated at the repayment
amounts.
Liabilities on orders in progress comprise payments on account
and accrued amounts from the recognition of sales. Sales are
accrued within this item which have arisen from contractually
agreed invoices for prepayments or payments in advance,
but cannot yet be recognized as sales according to the above
described sales recognition methods.
Derivative financial instruments
Derivatives are reported as assets or liabilities on the balance
sheet (sfas 133 and sfas 149) and carried at fair value. Depending
on their type, changes in the fair value of the derivative financial
instruments are recognized in the relevant period either in income
or, if they have no impact on income, in other comprehensive
income.
Consolidated funds statement
The funds statement shows the changes to the balance sheet
item liquid funds resulting from cash flows from ongoing
business activity, investment activity and financing activity.
Some entries in the consolidated funds statement are derived
indirectly from changes to balance sheet entries. These are
adjusted for the effects of currency translations 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 funds statement
regarding the arithmetical changes in the consolidated financial
statements, the fixed assets schedule and other information from
the notes to the financial statements.
Standard sfas 150, “Accounting for Certain Financial
Instruments with Characteristics of both Liabilities and Equity”,
was published in May 2003. This provides that certain financial
instruments, which are eligible for classification as either
equity or as liabilities, must be treated as liabilities. Changes
to the market values of such instruments must in general be
accounted for through the income statement. sfas 150 applies
to financial instruments issued or modified after 31 May 2003.
There is no impact on the consolidated financial statements
of GfK.
Also in May 2003, Interpretation eitf 01-8, “Determining
Whether an Arrangement Contains a Lease”, was adopted,
which provides detailed information about specific rules of
sfas 13, “Accounting for Leases”. In eitf 01-8, a model is
used to illustrate the provisions in contracts on the basis of
which the existence of a leasing relationship can be identified
if there are no explicit provisions to that effect. eitf 01-8
applies equally to lessors and lessees. The interpretation applies
to all agreements which have been concluded, modified or
acquired after 28 May 2003. eitf 01-8 has no impact on the
consolidated financial statements of GfK.
In June 2003, the fasb published fasb Staff Position (“fsp”)
fin 45-1, “Accounting for Intellectual Property Infringement
Indemnifications under fasb Interpretation No. 45, Guarantor’s
Accounting and Disclosure Requirements for Guarantees,
Including Indirect Guarantees of Indebtedness of Others”.
fsp fin 45-1 deals with the accounting for damages in respect
of infringements of intellectual property rights, and details
are given, the presence of which will bring such damages within
the scope of fin 45. There is no impact for the GfK Group.
In September 2003 the fasb published fasb Staff Position sfas
146-1, “Determining Whether a One-Time Termination Benefit
Offered in Connection with an Exit or Disposal Activity Is, in
Substance, an Enhancement to an Ongoing Benefit Arrangement”. In accordance with this Staff Position, restructuring
measures are to be treated not as one-off contributions but
as extensions to benefit arrangements if they have long-term
impact on existing benefit arrangements and do not only have
short-term impact limited to a specific measure or to a certain
period. The fsp applies to accounting periods beginning after
15 September 2003. It has no impact on the consolidated
financial statements of the GfK Group.
119
In October 2003, fasb Staff Position fin 46-6, “Effective Date
of fasb Interpretation No. 46, Consolidation of Variable Interest
Entities”, was published. This revises the effective date of
Statement fin 46, which deals with the treatment of “Variable
Interest Entities”. The GfK Group has no variable interest
entities.
In November 2003, Interpretation eitf 03-1, “The Meaning of
Other-Than-Temporary Impairment and Its Application to Certain
Investments”, was adopted. This requires the provision of
additional information in the notes to the financial statements if
securities are devalued without income statement impact due to
a temporary fluctuation in value. The reason for the devaluation
must be set out, and the devaluation amount as well as the fair
value of the affected securities must be stated. The Interpretation
applies to the financial years ending after 15 December 2003.
The GfK Group has undertaken no material devaluations of
securities without income statement impact.
In December 2003, the fasb published fasb Staff Position fin
45-2, “Whether fasb Interpretation No. 45, Guarantor’s
Accounting and Disclosure Requirements for Guarantees,
Including Indirect Guarantees of Indebtedness of Others,
Provides Support for Subsequently Accounting for a Guarantor’s
Liability at Fair Value”. This clarifies that fin 45 governs the
valuation of guarantees granted at the fair value only at the time
of their issue and not for any later date. For later dates, guarantees must be valued according to the general accounting principles. To date, fsp fin 45-2 has had no impact on the GfK Group.
fasb Staff Position fin 46-8, “Evaluating Whether as a Group
the Holders of the Equity Investment at Risk Lack the Direct
or Indirect Ability to Make Decisions about an Entity’s Activities
through Voting Rights or Similar Rights under fasb Interpretation
No. 46, Consolidation of Variable Interest Entities”, was also
published in December 2003. In accordance with fin 46, variable
interest entities are concerned and are to be consolidated by
interest groups which do not participate in the equity of the
company, when external third parties rather than the holders of
the equity investment have the ability to take important decisions
concerning the entity. fsp fin 46-8 provides more details about
how the criterion of the lack of the ability of the holders of the
equity investment to make decisions is to be interpreted. The
GfK has no variable interest entities.
A further publication in December 2003 was that of the revised
Standard sfas 132, “Employers’ Disclosures about Pensions
and Other Postretirement Benefits – an amendment of fasb
Statements No. 87, 88 and 106”. This significantly expands the
pension provision details that are to be included in the Notes to
the financial statements, especially concerning the plan assets.
In the case of listed companies, sfas 132 already applies in
principle for financial years ending after 15 December 2003.
Specific disclosure obligations apply only with effect from
financial years ending after 15 June 2004. GfK has expanded
the Notes to its 2003 financial statements to comply with the
necessary disclosure requirements of sfas 132.
120
Estimates
To some 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. The actual
amounts concerned may deviate from such estimates.
Scope of consolidation and major acquisitions
Fully consolidated companies
As at 31 December 2003, the scope of consolidation in
accordance with us gaap includes twelve (2002: ten) German
and 80 (2002: 81) foreign subsidiaries in addition to the parent
company.
The following table shows the changes in fully consolidated
subsidiaries between 1 January 2003 and 31 December 2003:
Fully consolidated subsidiaries (No.)
1.1. 2003
Additions
Disposals
Germany
10
2
0
31.12.2003
12
Abroad
81
3
4
80
Total
91
5
4
92
On 1 January 2003, GfK Media Ltd., London, uk, a company
operating in the Media segment, was founded.
In June GfK acquired a majority interest in Inform Business
Development Pty. Ltd., Sydney, Australia. The company operates
in the Non-Food Tracking segment.
With effect from 1 July 2003, GfK acquired a majority interest
in the Non-Food Tracking segment company media control
GfK international GmbH, Baden-Baden, as well as a majority
stake in the HealthCare segment company v2 GfK llc, Blue Bell,
Pennsylvania, usa.
In August, GfK Non-Food Tracking Holding GmbH was established,
registered in Nuremberg. Since 31 December 2003, the company
has acted as an international holding company for European,
Australian and Asian GfK Group companies operating in the
Non-Food Tracking segment.
The purchase price for the above acquisitions amounted to a
total of eur 20,078 thousand. This gave rise to a goodwill figure
of eur 19,730 thousand, which relates to the Non-Food Tracking
and HealthCare segments.
Notes: scope of consolidation
Encodex b.v., Amstelveen, Netherlands, was liquidated on
1 January 2003. Borell Market Research ab, Stockholm, Sweden,
has been in liquidation since September 2003. The business
of adval sarl, Issy les Moulineaux, France, was taken over on
1 January 2003 by Institut de Sondage Lavialle (isl) s.a.,
Issy les Moulineaux, France; the company was wound up on
30 September 2003. The business of ps – Martin Hamblin
Limited, London, uk, has been carried on since 1 January 2003
by Martin Hamblin GfK Limited, London, uk. The four companies
were deconsolidated for these reasons.
Associated companies
The following table shows the changes in associated companies
between 1 January 2003 and 31 December 2003:
Associated companies (No.)
1.1. 2003
Additions
Disposals
3
0
0
3
Abroad
24
3
3
24
Total
27
3
3
27
Germany
31.12.2003
Companies of minor importance
The GfK Group did not include 35 (2002: 31) companies in the
consolidated financial statements during the reporting year
because they were only of minor significance for the net assets,
financial position and results of operations of the Group.
Following the acquisition of further shares in the former “other
participation” gral-iteo tržne raziskave d.o.o., Ljubljana,
Slovenia, GfK now has a majority stake in this company.
However, as a company of minor importance it has not been
consolidated in the year under review.
ps – Martin Hamblin Limited, London, uk, was deconsolidated,
because it is no longer trading. Borell Market Research ab, Stockholm, Sweden, was deconsolidated due to the commencement
of bankruptcy proceedings.
These companies are of minor importance to GfK’s consolidated
financial statements for the above reasons.
In Brussels, Belgium, GfK – european opinion research
centre eeig was established. As part of the acquisition of media
control GfK international GmbH, Baden-Baden, its subsidiaries
Media Control ag, Zurich, Switzerland, and Media Control
Marketing Research España, s.l., Madrid, Spain, became part
of the GfK Group. These companies are of minor importance.
prisma Projekt-Beratung GmbH, Hamburg, was merged with
GfK prisma Institut für Handels-, Stadt- und Regionalforschung
GmbH & Co. kg, Hamburg.
The consolidated financial statements as at 31 December 2003
report participations in 27 (2002: 27) associated companies.
Brand Index vof, Hilversum, Netherlands, was established.
Due to a reduction in the level of participation, i+g Infratest
Medical Research Inc., Rhode Island, usa, is now classified as
an associated company. The participation in Intelect Partnership,
Port Washington, New York, usa, was replaced by an equal
holding in npd Intelect, l.l.c., Port Washington, New York, usa.
The participations in Holden Pearmain Research Ltd., London,
uk, and Isometric Solutions, llc, Minneapolis, usa, were sold.
Other participations
The number of other participations decreased by comparison
with the previous year from nine to seven.
The participation in Centrum voor Marketing Analyses b.v.,
Amsterdam, Netherlands, was sold.
Following an increase in its shareholding, the GfK Group now
has a majority interest in gral-iteo tržne raziskave d.o.o.,
Ljubljana, Slovenia.
Notes to the consolidated income statement
The breakdown of sales by region and segment is shown as part
of the segment reporting (section 23).
The participation in i+g Infratest Medical Research Inc., Rhode
Island, usa, was reduced, so that the company is now classified
as an associated company.
The majority interest in i+g Infratest & GfK Gesundheitsforschung
(Suisse) GmbH, Basel, Switzerland, was disposed of during the
year under review.
On aggregate, external sales, total assets and net income for
the year of these companies amount to less than 2 % of the
corresponding figures from the consolidated financial statements
in each case.
121
1. Other income less other expenses
The breakdown of other income and expenses is as follows:
2002
2003
2,166
6,219
Income from deconsolidation
197
447
Income from rental and lease agreements
500
500
Income from previous reporting periods
913
280
Exchange gains
Profits from the disposal of tangible and
intangible assets
188
213
Miscellaneous
1,060
811
Other income
5,024
8,470
Profits from the disposal of participations in associated companies
and other participations were affected in the previous year by
a book gain of eur 3,001 thousand arising in connection with
the splitting of Infratest + GfK Gesundheitsforschung GmbH &
Co., Berlin. During the year under review, this item comprises
primarily the profit of eur 1,562 thousand on disposal of the
participation in Centrum voor Marketing Analyses b.v.,
Amsterdam, Netherlands.
Depreciation of participations in affiliated and associated
companies comprise primarily GfK do Brasil s/c Ltda., São Paulo,
Brazil (eur 1,500 thousand) and m2a s.a., Saint Aubin, France
(eur 1,000 thousand).
3. Net interest income
Exchange losses
4,259
6,246
Expenses from deconsolidation
441
1,237
Losses from the disposal of tangible and intangible
assets
208
391
Expenses under rental and lease agreements
488
370
25
303
Expenses from previous reporting periods
Miscellaneous
3,230
848
Other expenses
8,651
9,395
– 3,627
– 925
Other income less other expenses
Miscellaneous other income essentially contains income from
further offsetting and transitory items (eur 288 thousand) and
insurance recoveries (eur 154 thousand).
Miscellaneous other expenses essentially comprise personnelrelated expenses (eur 129 thousand), charitable donations (eur
129 thousand) and bank charges (eur 123 thousand).
18
Income from participations in associated companies
2,846
4,167
Profits from the disposal of participations in associated
companies and other participations
3,606
1,569
8
21
6,515
5,775
Expenses from loss transfer from affiliated
companies
78
55
Depreciation on participations in affiliated
and associated companies
35
2,550
Expenses on participations
122
2003
55
Losses from the disposal of participations in affiliated
and associated companies
736
Interest income from other loans
393
292
Interest income from receivables
500
182
0
178
Income from derivative financial instruments
Interest income from available-for-sale
securities
15
4
Interest income from affiliated companies
28
46
Interest income from associated companies
373
339
Interest income
2,176
1,777
Interest and similar expenses due to banks
2,885
2,306
Interest and similar expenses due to others
1,591
1,410
29
29
Interest and similar expenses due to affiliated
companies
Net interest income
2002
Income from participations
2003
867
Interest expenses
Net income from participations is as follows:
Income from other participations
2002
Interest income from bank balances
Miscellaneous interest expenses
2. Net income from participations
Income from participations in affiliated companies
Net interest income is as follows:
24
62
137
2,667
6,378
3,108
0
52
4,505
3,797
– 2,329
– 2,020
Notes: consolidated income statement
The Group’s taxes on income are as follows:
4. Net other financial income
Net other financial income breaks down as follows:
2002
Income from derivative financial instruments
Profits from securities held as current assets
Write-ups on securities held as current assets
Miscellaneous other financial income
Other financial income
2002
2003
0
616
Germany (before consolidation measures)
111
156
Abroad (before consolidation measures)
2
123
29
0
142
895
0
1,940
Losses from securities held as current assets
1,331
98
Losses from disposal of loans to associated
companies
1,194
0
13
36
Miscellaneous other financial expenses
Other financial expenses
Net other financial income
2,538
2,074
– 2,396
– 1,179
Income from derivative financial instruments arise mainly from
the valuation at the balance sheet date of a Swiss franc cross
currency swap.
The write-downs on loans to associated companies relate to loans
to the bwv Group, Switzerland (eur 888 thousand) and loans to
Caribou Lake Software, llc, Minneapolis, usa (eur 1,052 thousand).
The loss of eur 1,194 thousand reported in the previous year
from the disposal of loans to associated companies related to the
waiver of a loan to mmxi Europe b.v., Amsterdam, Netherlands,
in connection with the disposal of the participation.
5. Taxes on income and earnings
The result before income taxes is divided between Germany and
abroad as follows:
2002
2003
Germany (after consolidation measures)
32,444
19,130
Abroad (after consolidation measures)
12,837
47,139
Result from ongoing business activity
45,281
66,269
4,982
8,061
10,505
13,442
15,487
21,503
6,828
2,576
Deferred taxes
Germany
Abroad
Write-downs on loans to associated
companies
2003
Current taxes
Taxes on income and earnings
– 7,038
1,129
– 210
3,705
15,277
25,208
The tax advantage from the utilization of loss carryforwards
during financial year 2003 amounts to eur 1,401 thousand
(2002: eur 1,079 thousand). Adjustments in deferred taxes
because of changes in the underlying tax rates reduced tax
expenses by a further eur 156 thousand (2002: eur 519). It was
not necessary to revalue the deferred tax assets existing at the
start of the year to take account of the likelihood that deferred
tax assets will be recognized (in 2002 the tax advantage was
eur 317 thousand). Similarly, government investment tax
credits had no impact on income tax (in 2002 there had been
a reduction in taxes of eur 122 thousand).
The tax rates used to calculate deferred taxes for the German
companies with registered offices in Nuremberg comprise
corporation tax of 26.5 % for the assessment period 2003
and 25 % for all other assessment periods plus the solidarity
surcharge of 5.5 % (2002: 5.5 %) on the corporation tax debt
paid as well as the effective trade tax rate of 13.449 % (2002:
13.160 %). The flood victim solidarity law (“Flutopfersolidaritätsgesetz”) passed in September 2002 caused a non-recurring
rise in the corporation tax rate from 25 % to 26.5 % for financial
year 2003.
This results in a tax rate of 39.824 % as at 31 December 2003.
In the previous year, a tax rate of 41.118 % was applied for
deferred taxes which were expected to be written back in 2003.
Other deferred taxes were calculated at a tax rate of 39.824 %.
With effect from 1 January 2004, a change in tax legislation
means that gains from disposals of participations in corporations
as well as dividends from German companies are no longer exempt
from tax. Tax applies to 5 % thereof. Losses on disposals remain
non tax deductible. This amendment in tax legislation does not
give rise to any material impact on the present consolidated
financial statements of the GfK Group.
The deferred taxes of the remaining German companies and
the foreign companies are calculated at the respective countryspecific tax rates.
123
The following table contains a reconciliation of the anticipated
income tax expense to the income tax expense stated in financial
year 2003. To calculate the anticipated tax expenses, the tax rate
of the parent company, GfK ag, valid during the financial year is
multiplied by the pre-tax result.
2003
Total tax rate
Expected income tax
Increase/reduction in income tax debt resulting from:
differences in tax rates
change in permanent differences
tax-exempt income from the disposal of participations
adjustment of deferred tax due to
tax rate changes
income from participations valued at equity,
not eligible for tax
change in valuation allowance for deferred tax assets
consolidation of taxable income from participations
additional tax payments or refunds from previous years
deviating tax base
other tax-exempt income
other non-deductible expenses
other
Tax expenses reported
41.118 %
27,248
The deferred taxes result from the following balance sheet items:
31.12.2002
31.12.2003
3,596
2,872
Tangible assets
613
713
Financial assets
210
567
14,551
1,641
465
214
Intangible assets
Inventories
Accounts receivable and other assets
Prepaid expenses
6
19
– 4,281
Provisions
3,803
3,670
– 3,021
Liabilities
10,031
20,896
– 552
Deferred income
Loss carryforwards and tax credits
– 156
122
60
6,232
5,249
Deferred tax assets before valuation allowance
39,629
35,901
78
Valuation allowance
– 1,691
– 1,780
298
Deferred tax assets
37,938
34,121
Intangible assets
– 3,774
– 5,403
617
Tangible assets
– 9,069
– 8,777
– 803
Financial assets
– 416
– 180
4,184
Inventories
– 110
– 210
– 17,082
– 17,196
– 78
– 112
315
1,303
– 22
25,208
Accounts receivable and other assets
Prepaid expenses
Special reserve item
In 2002, the stated tax expenses of eur 15,277 thousand were
eur 2,756 thousand less than the anticipated tax expenses of
eur 18,033 thousand. The difference resulted essentially from
tax-free income from the disposal of participations (eur –1,652
thousand), miscellaneous tax free profits (eur – 817 thousand)
as well as other non-deductible expenses (eur 2,446 thousand)
and tax rate differences (eur – 2,631 thousand).
0
– 402
Provisions
– 1,155
– 1,156
Liabilities
– 2,576
– 1,414
Deferred income
Deferred tax liabilities
Net deferred tax assets (liabilities)
– 358
– 32
– 34,618
– 34,882
3,320
– 761
After netting out, the deferred taxes are reported in the balance
sheet as follows:
31.12.2002
Total
Deferred tax assets
Deferred tax liabilities
Net deferred tax assets
(liabilities)
124
31.12.2003
of which
long-term
Total
of which
long-term
9,324
5,097
8,327
4,822
– 6,004
– 4,084
– 9,088
– 5,490
3,320
1,013
– 761
– 668
Notes: consolidated balance sheet
The total income tax expenses in shareholders’ equity are
as follows:
Tax expenses reported
Tax expenses on components of the other
comprehensive income
Total income tax expenses in shareholders’ equity
Notes to the consolidated balance sheet
2002
2003
15,277
25,208
216
66
15,493
25,274
As at 31 December 2003, the Group had domestic tax loss
carryforwards amounting to eur 2,106 thousand (2002:
eur 2,386 thousand) and foreign tax loss carryforwards of
eur 14,344 thousand (2002: eur 15,875 thousand). The
domestic loss carryforwards can be carried forward without
restriction in terms of date and amount. Among the foreign
loss carryforwards, the amount of eur 9,611 thousand may
be carried forward without limit or for a period of more than
15 years, and the amount of eur 4,733 thousand is available
for carryforward until 2013 or earlier.
The estimate of their future realizability governs the valuation of
deferred tax assets. This is dependent on the creation 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
more likely than not that the relevant benefits of the recognized
deferred tax credits will be realized – according to the provisions
of us gaap. For the portion of deferred tax assets not covered
by these assumptions, a corresponding valuation allowance
amounting to eur 1,780 thousand (2002: eur 1,691 thousand)
was applied. The eur 89 thousand increase in the valuation
allowance on deferred tax assets is essentially due to the change
in deferred tax assets at the affected companies.
A breakdown of the fixed assets and their development during
the reporting period is given in the consolidated fixed assets
schedule.
Non-scheduled depreciation of eur 3,489 was incurred. This relates
exclusively to write-downs of financial investments. Further details
are set out in the above explanatory comment on net income from
participations and net other financial income. In all cases, the
basis for the write-down is that the expected discounted future cash
flows from these financial investments are less than the book value.
7. Intangible assets
Software
Software breaks down as follows:
31.12.2002
31.12.2003
Software as per sfas 86
1,985
391
Software as per sop 98-1
17,502
16,734
Other software
Software
6,617
5,617
26,104
22,742
sfas 86 applies to software which is to be sold, leased or
otherwise marketed. sop 98-1 applies to software specifically
developed for internal use. The item other software contains
standard software for internal use.
Goodwill
Deferred tax liabilities on retained earnings of foreign subsidiaries
are not included in the balance sheet because these earnings are
intended to remain permanently invested.
An impairment test is carried out in accordance with sfas 142
each year to determine the extent to which there is an extraordinary amortization requirement for existing goodwill. No
requirements for amortization resulted from the impairment
test for 2003.
6. Earnings per share
Number of shares outstanding
– non-diluted –
Number of shares outstanding
– diluted –
2002
2003
25,673
33,322
26,121,998
26,121,998
Other intangible assets are as follows:
26,121,998
26,121,998
Payments on account for intangible
assets
0.98
1.28
Earnings per share (diluted) in eur
0.98
1.28
31.12.2002
31.12.2003
937
3,510
367
1,111
1,304
4,621
125
Consolidated fixed assets schedule in eur’000
acquisition and manufacturing costs
Change
Brought
in scope
forward to
Currency
of consoli-
Reclassi-
Equity
As at
1.1. 2003
effects
dation
Additions
Disposals
fications
adjustment
31.12. 2003
1. Software
53,919
– 1,580
856
5,892
1,824
198
2. Goodwill
177,195
– 190
25,124
1,336
398
3,910
186
– 169
12,789
25,980
11,138
2,408
29
273,317
674
7
403
32,105
11,595
8,295
– 356
124,107
I. Intangible assets
3. Other intangible assets
10,639
– 1,405
241,753
– 3,175
31,885
– 850
122,754
– 2,079
57,461
203,067
II. Tangible assets
1. Land, land rights and
buildings, including
buildings on land
owned by third parties
2. Other equipment,
fixtures and fittings
3. Leased items
488
27,442
– 16
18
1,283
660
– 76
27,991
182,081
– 2,945
506
13,552
8,962
– 29
184,203
5,222
– 36
162
112
41
1,597
7,016
50
100
III. Financial assets
1. Shares in affiliated
companies
2. Loans to affiliated
companies
3. Participations in associated
companies
200
14,523
– 1,033
4. Loans to associated
companies
6,311
– 50
94
5. Other participations
2,143
– 11
2,130
134
6. Payments on account
for shareholdings
7. Available-for-salesecurities
8. Other loans
126
150
333
13,689
6,355
865
– 1,597
1,800
161
161
753
–9
31
11
764
8,868
– 23
1,833
451
10,227
38,020
– 1,162
162
4,411
1,602
333
40,162
461,854
– 7,282
26,648
29,101
12,972
333
497,682
Notes: consolidated fixed assets schedule
cumulative depreciation/amortization
book values
Change
Brought
in scope
forward to
Currency
of consoli-
Reclassi-
As at
1.1. 2003
effects
dation
Additions
Disposals
fications
31.12. 2003
27,815
– 629
543
8,502
1,594
82
34,719
22,742
26,104
41,294
161,773
135,640
41,555
– 261
9,335
– 1,325
78,705
– 1,954
9,391
– 323
90,174
– 1,157
282
– 83
344
186
8,846
1,780
903
3
12,990
7,907
113
82
31.12. 2003
31.12. 2002
8,168
4,621
1,304
84,181
189,136
163,048
9,968
22,137
22,494
94,130
29,977
32,580
12,798
–2
5
2,038
634
– 195
14,010
13,981
14,644
112,363
– 1,482
– 78
15,931
8,544
– 82
118,108
66,095
69,718
1,172
– 34
318
1,549
3,005
4,011
4,050
19
–7
12
138
181
13,689
14,523
5,815
540
2,078
1,520
280
623
4,233
– 358
1,940
1,520
161
36
–1
19
4
50
714
717
10,227
8,868
6,980
– 400
318
3,508
4
10,402
29,760
31,040
198,048
– 3,836
522
28,285
10,328
212,691
284,991
263,806
127
The expected amortization expenses for intangible assets within
the next five financial years are as follows:
Expected amortization expenses
2004
6,432
2005
4,977
2006
2,563
2007
1,950
2008
1,370
The capitalized leased assets consist of eur 15,717 thousand
(2002: eur 15,576 thousand) in respect of buildings and
eur 12,275 thousand (2002: eur 11,866 thousand) in respect of
tangible assets. Net of cumulative depreciation, the resultant
book value is eur 11,862 thousand (2002: eur 12,120 thousand)
for buildings and eur 2,119 thousand (2002: eur 2,524 thousand)
for tangible assets.
The future minimum lease payments under such agreements are
due as follows as at 31 December 2003:
8. Tangible assets
2004
2,542
Leasing
2005
2,200
The GfK Group leases office premises and business equipment
under long-term lease agreements. As a rule, the lease payments
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 substantially
bears the risks and opportunities arising from the use of the
leased assets, these are capitalized (capital lease). Otherwise
the lease payments are carried as an expense (operating lease).
There are no significant sub-leases.
2006
1,955
2007
1,803
a) Operating leases
The following payments under operating lease agreements were
carried as expenses:
Minimum lease payment
Contingent lease payment
Less sub-lease payments received
Lease payments
2002
2003
16,129
15,092
544
391
– 157
– 469
16,516
15,014
The future minimum lease payments arising from such
agreements are due as follows as at 31 December 2003:
2008
14,766
2005
11,121
2006
8,644
2007
6,881
5,396
Subsequent years
10,124
Future minimum lease payments under operating leases
56,932
1,644
Subsequent years
13,175
Future minimum lease payments under capital leases
23,319
Less: (interest expenses in particular)
– 6,232
Liabilities under capital leases
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 capital lease. The lease was
concluded for 30 years with an original obligation amounting to
eur 13,012 thousand. The lease agreement can be terminated
from March 2012 onwards with the option to acquire the
building for eur 7,533 thousand. If the lease continued over the
remaining 10 years, the purchase value in March 2022 would
amount to eur 5,028 thousand.
The capital lease liability is eur 17,087 thousand (2002: eur
15,760 thousand) of which eur 1,491 thousand (2002: eur 2,305
thousand) has a remaining term of under one year.
9. Financial assets
2004
2008
128
b) Capital lease
The composition and development of the financial assets is
shown in the consolidated fixed assets schedule. Further
information on the GfK Group’s participations in affiliated and
associated companies and other participations is provided in
the list of shareholdings of the GfK Group.
The following table shows the annual results for the main
companies in the GfK Group:
17,087
Company name and registered office
Net income
for the year
emer GfK, s.l., Valencia, Spain
The reclassification of securities from fixed assets to current
assets gave rise to neither profits nor losses (2002: profit of
eur 14 thousand).
245
Each security is valued separately.
fessel-GfK Institut für Marktforschung
Ges.m.b.H., Vienna, Austria
1,147
GfK Asia Pte Ltd., Singapore, Singapore
1,712
GfK consumer and business information
italy S.p.A., Milan, Italy
– 600
GfK Custom Research Inc., Minneapolis, usa
992
GfK Danmark A/S, Frederiksberg, Denmark
– 34
10. Trade receivables
GfK Marketing Services GmbH & Co. kg, Nuremberg
8,498
third parties
GfK Marketing Services Japan k.k., Tokyo, Japan
1,225
affiliated companies
GfK Marketing Services Ltd., West Byfleet, Surrey, uk
2,423
associated companies
GfK Marketing Services s.a., Rueil-Malmaison, France
2,018
other participations
GfK Panelservices Benelux b.v., Dongen, Netherlands
1,160
GfK Sofema International sarl, Rueil-Malmaison, France
942
GfK Sverige Aktiebolag, Lund, Sweden
– 1,321
gpi Kommunikationsforschung Gesellschaft für
Pharma-Informationssysteme mbH, Nuremberg
953
iha Italia S.p.A., Milan, Italy
– 352
iha-GfK ag, Hergiswil, Switzerland
4,126
Institut de Sondage Lavialle (isl) s.a.,
Issy les Moulineaux, France
270
Institut Français de Recherche – ifr s.a.,
Viroflay, France
3,209
Intomart b.v., Hilversum, Netherlands
488
Martin Hamblin GfK Limited, London, uk
311
v2 GfK llc, Blue Bell, Pennsylvania, usa*)
2,524
Loans to affiliated and associated companies include valueadjusted loans with a disbursed amount of eur 6,455 thousand
(2002: eur 5,165 thousand). The accumulated write-downs on
these loans amount to eur 5,827 thousand (2002: eur 4,252
thousand).
Securities
The following table shows an overview of the acquisition costs,
fair values and unrealized profits and losses of the portfolio of
available-for-sale securities:
Equity securities
31.12.2002
31.12.2003
Acquisition costs
753
734
Fair value
717
714
Unrealized profit
0
29
Unrealized loss
7
7
The equity securities held in the portfolio at the end of the year
have a remaining term of over one year.
31.12.2003
106,927
109,694
814
477
2,217
1,485
0
127
109,958
111,783
Receivables not yet invoiced
to third parties
Less: valuation allowance
Trade receivables
15,629
20,036
125,587
131,819
– 6,251
– 6,332
119,336
125,487
Of the trade receivables, an amount of eur 63 thousand (2002:
eur 57 thousand) has a remaining term of over one year.
11. Other receivables and assets
31.12.2002
31.12.2003
Receivables from tax and other authorities
5,236
4,121
Receivables from insurance companies
1,065
1,839
Guarantee deposits
1,324
1,429
Amounts owed by related parties
3,333
909
*) Net income for the year relates to the period from 1 July 2003 to 31 December 2003
Loans
31.12.2002
Invoiced trade receivables,
in respect of
Advance payments, credit balances and refund claims
775
708
Amounts owed by employees
957
496
Other receivables under share and asset deals
961
382
Stationery and office supplies and gifts
379
342
Other amounts owed by affiliated companies
660
1,210
2,363
2,088
Other amounts owed by associated
companies
Other assets
871
1,261
17,924
14,785
Less: valuation allowance
– 1,573
– 1,588
Other receivables and assets
16,351
13,197
Of the other receivables and assets, an amount of eur 2,192
thousand (2002: eur 2,709 thousand) has a remaining term of
over one year.
The advance payments, credit balances and refund claims
essentially comprise amounts owed by households, suppliers
and employees.
The proceeds from the sale of available-for-sale securities for
financial year 2003 amount to eur 5 thousand (2002: eur 83
thousand).
129
12. Valuation allowances
Valuation allowances developed as follows:
Trade
receivables
Other
receivables
and assets
3,677
1,011
As at 31.12.2001
Changes in the scope
of consolidation
Additions
422
0
3,053
563
Utilization
– 301
0
Release
– 573
0
Currency difference
As at 31.12. 2002
Changes in the scope
of consolidation
Additions
Utilization
Release
Reclassification
Currency difference
As at 31.12. 2003
– 27
–1
6,251
1,573
10
0
2,212
26
– 604
– 10
– 1,495
0
11
0
– 53
–1
6,332
1,588
13. Securities
The trading securities reported under current assets are carried
at fair value. During the year under review, write-downs of eur
98 thousand and write-ups of eur 123 thousand were booked to
the income statement.
14. Shareholders’ equity
Subscribed capital
As at 31 December 2003, the subscribed capital of GfK Aktiengesellschaft remains unchanged at eur 66,872 thousand. The
subscribed capital is divided into 26,121,998 no-par bearer
shares. Each share represents a portion of the subscribed capital
equivalent to eur 2.56. GfK Aktiengesellschaft does not hold
any of its own shares. As the main shareholder, GfK-nürnberg
Gesellschaft für Konsum-, Markt- und Absatzforschung e.V.,
Berlin, holds 64 % of the shares.
Authorized and contingent capital
The Management Board is authorized, subject to the approval of
the Supervisory Board, to increase the company’s subscribed
capital on one or more occasions up to 12 June 2007, by issuing
new no-par shares in return for cash or non-cash contributions
up to a maximum amount of eur 21,000 thousand.
130
In June 1999, the shareholders passed a resolution for a contingent increase in the company’s subscribed capital of eur 5,120
thousand by issuing up to 2,000,000 new no-par bearer shares.
At the Extraordinary General Meeting of 3 September 1999, a
resolution was passed to relate profit entitlement to the start of
the financial year in which options are exercised. The aim of the
contingent capital increase is to grant option rights to the senior
management team of the company and its affiliated companies
in terms of §§ 15 et seq. of the German Stock Corporation Act.
The prerequisite for acquiring option rights is 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. By waiving a portion of the promised bonus
in the ratio of 1:2.5, this component can be replaced by options.
The actual number of options for the first six tranches (2000/2005,
2001/2006, 2002/2007, 2003/2008, 2004/2009,2005/2010) results
from division of this figure by a factor of 4.5. The option rights
of the 2000/2005 tranche have a term until 31 December 2005,
and options not exercised will lapse. 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.
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 contingent capital so far permitted which amounts to
eur 2,000 thousand was insufficient to service all the options
which can be issued based on the authorization of the General
Meetings dated 3 September 1999 and 13 June 2002. The
subscribed capital was therefore being increased by using up the
permissible maximum amount by a further eur 1,567,229.44 by
issuing up to 612,199 no-par bearer shares (contingent capital ii).
The shares are being issued to the holders of option rights based
on the resolutions of the company dated 3 September 1999 and
13 June 2002.
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 it is 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.
Stock options
Tranche
1
2
3
Term
Total
options
2000/2005
389,165
2001/2006
2002/2007
Of which Exercise
Manageprice
ment board
in eur
76,5123)
85,2153)
375,725
85,2153)
380,300
55.20
41.71
24.14
Fair value information
If the accounts were drawn up according to sfas 123 “Accounting
for Stock Based Compensation”, the fair value would be used in
valuing the stock options.
The fair value of the stock options issued by GfK during 2000,
2001, 2002 and 2003 has been calculated at the date of granting
the options on the basis of a Black-Scholes option pricing model,
taking into account the terms of issue. The parameters used in
determining the fair value and the totals based on these were as
follows:
Tranche
Exercisable
from
to
20021)
20031)
20042)
Options
exercised
20051)
–
20061)
20072)
–
2003/2008
465,574
149,9993)
18.53
20052)
20082)
–
5
2004/2009
471,1174)
133,3324)
TBA
20062)
20092)
–
6
2005/2010
500,0024)
133,3324)
TBA
20072)
20102)
–
1
2
3
4
Implicit volatility on date of issue
33 %
39 %
39 %
42 %
Risk-free investment interest1)
5.2 %
4.8 %
4.7 %
2.8 %
5.58
5.59
5.55
5.55
Fair value per option in eur
16.42
12.92
7.63
7.30
Total value per programme
6,390
4,854
2,902
3,399
Term in years
–
4
1) Yields on German public sector bearer bonds outstanding with average remaining terms of over
five to six years inclusive.
1) Exercise of options commences after the General Meeting. Options may be exercised during the
following periods: from the third trading day on the Frankfurt stock exchange after the General
Meeting of GfK ag until 30 June (inclusive) and from the first day after publication of the halfyearly figures until 30 September (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 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.
The average weighted remaining term of the stock options as at
31 December 2003 was 3.6 years (2001: 4 years).
Supplementary disclosures (valuation at fair value as at
31 December 2003)
The following table shows the parameters and totals of the 4
issued tranches when valued at the 2003 year-end:
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.
Tranche
The development of the stock options issued has been as
follows:
2002
1
2
3
4
Implicit volatility on closing date
29 %
29 %
29 %
29 %
Risk-free investment interest1)
2.8 %
3.1 %
3.4 %
3.7 %
2
3
4
5
0.10
1.13
5.88
9.34
40
426
2,238
4,346
Term in years
2003
Number of
Options
Average
exercise
price
in eur/share
Number of
options
Average
exercise
price
in eur/share
Balance
at start of year
764,890
48.57
1,145,190
40.46
Options
granted
380,300
24.14
465,574
18.53
Exercised
–
–
–
–
Expired
–
–
–
–
Repayments
–
–
–
–
Balance
at year-end
1,145,190
40.46
1,610,764
34.12
Exercisable
at year-end
389,165
55.20
764,890
48.57
Fair value per option in eur
Total value per programme
1) Swap rates with identical maturities.
As at the reporting date of 31 December 2003, the option value
is calculated taking into account the remaining terms of the
individual tranches. Market rates as at the balance sheet date of
31 December 2003 were used for the parameters.
During financial year 2003, the Stock Options Programme
involved no personnel expenses.
131
The changes in other comprehensive income are as follows:
Unrealized profits/losses from market valuation of
available-for-sale securities:
Change in unrealized profits/losses
Before
tax
2002
Tax
effect
2003
Tax
effect
Net
20
–9
2
–7
29
–9
– 14
5
–9
0
0
0
–9
0
–9
31
0
31
– 32
7
– 25
60
– 9
51
0
0
0
149
– 59
90
56
– 22
34
0
0
0
Difference from currency translation: capital consolidation and equity valuation
– 2,422
– 201
– 2,623
– 3,207
2
– 3,205
Change in other comprehensive income
– 2,398
– 216
– 2,614
– 2,998
– 66
– 3,064
Realized profits/losses owing to reclassification
Differences from currency conversion
Total unrealized profits/losses from available-for-sale securities
Change in unrealized profits/losses from derivative financial instruments
Difference from pension valuation
Proposed appropriation of profits
Provisions for pensions
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). A proposal will be made to the General Meeting to
distribute a dividend of eur 6,530 thousand (eur 0.25 per no-par
share) to shareholders out of the retained profit for 2003 of
eur 71,841 thousand and transfer eur 37,605 thousand to revenue
reserves.
The following tables provide more detailed information about the
GfK Group’s pension plans.
The projected benefit obligation (pbo) has developed as follows:
2002
Germany
Projected benefit
obligation as at 1.1.
Price differences
Abroad
2003
Germany
Abroad
20,750
1,493
19,092
1,612
–
– 93
–
– 93
15. Provisions
Service costs
1,098
200
447
188
The breakdown of provisions is as follows:
Interest costs
1,096
46
941
48
–
–
–
9
Actuarial
gains/losses
–3,299
– 13
739
190
Benefits paid
– 552
– 97
– 1,881
– 259
Plan amendments
–
76
–
–
Settlements
–
–
–4
–
19,093
1,612
19,334
1,695
Participant contributions
31.12.2002
Total
> 1 year
Provisions
for pensions
Provisions for taxes
132
Net
Before
tax
31.12.2003
Total
> 1 year
19,235
17,939
19,045
18,470
5,788
607
9,651
0
Other provisions
44,613
4,356
46,046
5,517
Provisions
69,636
22,902
74,742
23,987
Projected benefit
obligation
as at 31.12.
The following table shows the development of plan assets:
2002
Germany
Fair value
of plan assets
as at 1.1.
Price differences
Actual return on
plan assets
Employer contributions
Abroad
2003
Germany
Abroad
34
547
404
486
–
– 37
–
– 34
–3
1
10
–2
368
73
16
71
Participant contributions
5
–
–
–
Benefits paid
–
– 20
–
– 51
Settlements
–
– 78
– 337
– 99
404
486
93
371
Fair value
of plan assets
as at 31.12.
The measurement date for plan assets in Germany is 31 December
2003. The anticipated contributions for the following year
amount to eur 5 thousand. Due to the minor importance
of the German pension fund, the supplementary disclosures
according to sfas 132 have not been provided.
The following table shows the reconciliation from the financing
status of the plan assets to the amounts stated in the consolidated
balance sheet:
2002
Germany
Abroad
2003
Germany
Abroad
The following values result for pension plans in which the
accumulated benefit obligation (abo) exceeds the fair value of
the plan assets:
2002
Germany
Accumulated benefit
obligation – abo
Fair value of plan assets
at the end of the
reporting period
Abroad
2003
Germany
Abroad
15,846
1,182
16,394
1,097
404
486
93
371
The assumptions regarding the discount rate and compensation
trends as well as long-term return on the plan assets used
to calculate the pbo vary depending on the general economic
conditions of the country for which the pension plan has
been set up. The actuarial calculation of value is based on the
following assumptions (weighted averages):
2002
2003
Discount rate
5.6 %
5.2 %
Expected long-term return
on plan assets
2.6 %
1.2 %
Long-term compensation increase
5.1 %
4.5 %
The period-related net pension expenses for financial years 2002
and 2003 contain the following items:
1,324
Components of
pension expenses
– 242
Service cost (present value
of entitlement acquired
during financial year)
1,098
166
447
188
Interest cost
1,096
32
941
48
Expected
return on plan
assets
–2
–3
–4
–2
Included in the balance sheet
Amortization of
amounts from initial
application of sfas 87
or sfas 106
–1
4
–1
3
Prepaid
pension costs
Realized
gains and losses
Extent to which the pension
plan is financed
Unrealized
actuarial
gains/losses
Non-amortized amount
from initial
application of sfas 87
or sfas 106
Net figure
reported
18,689
– 519
11
18,181
1,126
– 84
– 67
975
19,241
– 1,230
10
18,021
– 58
1,024
– 79
–
–
–
Pension provision
18,260
975
18,021
1,024
Minimum pension
liability in other
comprehensive
income
–
–
–
–
18,181
975
18,021
1,024
Net figure
reported
Pension expenses (net)
2002
Germany
Abroad
2003
Germany
Abroad
176
9
–
21
2,367
208
1,383
258
Defined contribution plans
Some companies within the GfK Group offer their staff defined
contribution plans. The concrete benefits can vary depending on
the legal, tax and economic framework conditions of the country
concerned. The basis of assessment for contributions to such
plans is mainly the length of service with the company and the
wage or salary level of the employee. The pension expenses
of defined contribution plans amounted to eur 4,367 thousand
(2002: eur 3,758 thousand) in financial year 2003.
133
Other financial liabilities contain loan liabilities totalling eur
4,444 thousand (2002: eur 3,605 thousand) as at 31 December
2003, of which eur 3,588 thousand (2002: eur 3,502 thousand)
concerned related parties.
Other provisions
The breakdown of other provisions is as follows:
Personnel
Invoices outstanding
31.12.2002
31.12.2003
29,821
31,337
1,838
2,882
Commitments to authorities and insurance
companies
1,525
2,560
Sales
3,515
2,223
External accounting and auditing costs
1,704
1,930
34
1,065
Commitments to households,
respondents etc.
Commitments due to the letter of comfort
0
700
1,003
693
544
686
2
325
Anticipated losses on pending transactions
1,275
122
Miscellaneous
3,352
1,523
44,613
46,046
Lawyers’ and consultants’ fees
Financial instruments
Interest on payment of taxes for prior years
Other provisions
The provisions for employees comprise mainly commitments
for the payment of bonuses (eur 11,636 thousand), holiday
arrears (eur 8,567 thousand), severance payments (eur 4,735
thousand), partial retirement (eur 1,785 thousand) flexitime
balances (eur 1,691 thousand) and anniversary expenses (eur
1,585 thousand).
Liabilities from the acquisition of participations stood at eur
1,485 thousand (2002: eur 3,819 thousand) as at 31 December
2003, of which eur 0 (2002: eur 344 thousand) was in respect of
associated companies and eur 1,441 thousand (2002: eur 2,411
thousand) in respect of other related parties.
As at 31 December 2003, the weighted average interest rate for
amounts due to banks was 3.71 % (2002: 4.01 %).
The financial liabilities become due in the next five years and
thereafter as follows:
20041)
22,122
2005
8,581
2006
8,788
2007
5,920
2008
5,140
Subsequent years
16,056
66,607
1) Contains current account liabilities payable on demand in the context of credit lines
Miscellaneous other provisions mainly comprise amounts owed
to suppliers (eur 556 thousand) and obligations to related
parties (eur 525 thousand).
As at 31 December 2003, the GfK Group had confirmed credit
lines of eur 162,800 thousand (2002: eur 115,379 thousand),
of which eur 116,015 thousand (2002: eur 82,560 thousand)
has not been used. The weighted average rate of interest on the
credit lines is 3.91 % (2002: 6.43 %).
There is collateral amounting to eur 17,172 thousand (2002:
eur 19,307 thousand) for amounts due to banks and liabilities
under leases amounting to eur 62,049 thousand (2002:
eur 62,904 thousand). The collateral breakdown is as follows:
16. Financial liabilities
Financial liabilities are as follows:
31.12.2002
31.12.2003
15,301
12,752
31.12.2002
31.12.2003
24,221
17,014
2,305
1,491
Bills of exchange payable
2,013
0
Other financial liabilities
5,503
3,617
Short-term liabilities with a term of
up to 1 year
34,042
22,122
Amounts due to banks
22,923
27,948
transfer of movable assets
543
173
(4,688)
(4,898)
assignment of receivables
0
2,150
Amounts due to banks
Amounts due to banks secured by
mortgages
deposit or pledging of securities
337
451
assignment of receivables
1,754
1,313
other collateral
1,248
258
Liabilities under leases secured by
(of which with a remaining term of over 5 years)
Other financial liabilities
15,596
other collateral
(11,158)
Secured liabilities
2,462
941
(1,658)
(0)
Long-term liabilities with a term of
over 1 year
38,840
44,485
72,882
66,607
134
13,455
(10,380)
124
75
19,307
17,172
Notes: consolidated funds statement
17. Trade payables
19. Notes to the consolidated funds statement
Trade payables are as follows:
Of the cash flow from ongoing business activity of eur 69,221
thousand (2002: eur 69,304 thousand), an amount of eur 47,417
thousand (2002: eur 76,574 thousand) was invested, of which
eur 22,481 thousand (2002: eur 44,088 thousand) related to
the acquisition of affiliated companies and other business
units. From the remaining positive balance, dividends totalling
eur 8,235 thousand (2002: eur 6,144 thousand) were paid
to shareholders of GfK ag and to minority shareholders in
subsidiaries. In addition, financial obligations were reduced by
eur 6,272 thousand (2002: increase of eur 11,346 thousand).
The liquid funds in the balance sheet increased by eur 8,074
thousand (2002: down by eur 2,388 thousand).
31.12.2002
Remaining
Total term > 1 year
31.12.2003
Remaining
Total term > 1 year
Trade payables
owed to third parties
35,326
413
26,690
–
owed to affiliated
companies
734
–
1,147
–
owed to associated
companies
240
–
319
–
owed to other
participations
Trade payables
18
–
–
–
36,318
413
28,156
0
20. Related parties
During the year under review, significant relationships going
beyond the normal course of business existed with the following
persons and groups:
18. Other liabilities
The other liabilities comprise the following:
31.12.2002
31.12.2003
15,502
14,171
Liabilities in connection with social security
5,651
6,436
Wages and salaries
1,928
1,922
Accounts payable to insurance companies
1,026
1,673
134
700
90
657
Tax liabilities
Accounts payable to clients
Other accounts payable to
households, respondents, interviewers
related parties
24
2,463
1,937
520
affiliated companies
335
476
associated companies
136
138
Accounts payable to employees
other participations
Miscellaneous liabilities
Other liabilities
0
48
1,900
1,311
28,663
30,515
As at 31 December 2003, there were other liabilities amounting
to eur 133 thousand (2002: eur 3,093 thousand) with a remaining
term of over one year.
In connection with the restructuring of the Non-Food segment in
Europe and Asia, a participation in the newly-formed GfK NonFood Tracking Holding GmbH, Nuremberg was sold to The npd
Group Inc., Port Washington, New York, usa. GfK Non-Food
Tracking Holding GmbH functions as a holding company for
GfK Group companies operating in this segment in Europe and
Asia. With the acquisition of the participation, The npd Group
Inc., which was already a minority shareholder in GfK Group
subsidiaries in Asia, exercised a purchase option granted in
1997. The residual purchase price for the participation amounted
to eur 1,254 thousand. This resulted in a related liability of
eur 425 thousand.
On the basis of loans to GfK Group companies, there were
liabilities to The npd Group, Inc., Port Washington, New York,
usa, amounting to eur 776 thousand as at the reporting date.
This figure includes a loan obligation of eur 367 thousand with
a remaining term of more than one year. In the reporting year,
interest on loans totalled eur 28 thousand.
There were mainly loan obligations amounting to eur 1,100
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 19 thousand.
Mr Noël Muracciole is the minority shareholder in Institut
Français de Recherche – ifr s.a., Viroflay, France. There was
a non-interest bearing purchase price obligation of eur 1,441
thousand.
Ms Elcin Üner and Mr Ali Levent Orhun are minority shareholders and managing directors of Procon GfK Arastirma Hizmetleri
a.s., Istanbul, Turkey. On the reporting date, there were other
loans with a remaining term of more than one year of eur 858
thousand in each case. The interest on these amounted to eur 11
thousand in each case.
135
Ms Margaret Martin, Mr Derek Martin and Mr Allan Bowditch
are minority shareholders and managing directors of Martin
Hamblin GfK Limited, London, uk. As at the balance sheet date,
there were other loans totalling eur 1,612 thousand relating
to Ms Margaret Martin, with a remaining term of more than
one year. The interest income from these amounted to eur 50
thousand. There were other loans totalling eur 3,724 thousand
with a remaining term of more than one year relating to Mr
Derek Martin. The interest on these amounted to eur 115
thousand. There were other loans with a remaining term of
more than one year totalling eur 2,749 relating to Mr Allan
Bowditch. The interest on these amounted to eur 85 thousand.
As part of an asset deal, the entire business of mr Russia,
Moscow, Russia, was acquired for eur 660 thousand. The
management of mr Russia is identical in part with that
of GfK-rus Gesellschaft mbH, Moscow, Russia, which is a
consolidated affiliated company of the GfK Group.
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 1 January 2001 via GfK Holding, Inc.,
Wilmington, usa, to the effect that it assumes 25 % of the
liability for the contractual fulfilment 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 favour of npd Intelect, l.l.c.,
to secure a loan for usd 8,950 thousand. The loan commitment
as at 31 December 2003 amounted to eur 3,700 thousand
(usd 4,624 thousand) in total.
In the years 2004 to 2009, purchase price payment obligations
for additional shares of eur 54,173 thousand (2002: eur 24,321
thousand) will result from purchase contracts concluded in
connection with the acquisition of participations.
There were loan liabilities amounting to eur 2,663 thousand
in respect of the members of the management of various
subsidiaries.
The receivables and liabilities in respect of related parties have
a remaining term of up to one year, unless indicated otherwise.
In case of compliance by the parties to the contract, payment
obligations of eur 199 thousand will arise for the GfK Group
during the years 2004 to 2005 as a result of competition
agreements that have been concluded.
21. Contingencies and other financial commitments
The future commitments arising from lease agreements are
described in the section on leases.
The contingencies and other financial commitments that are
not carried as liabilities in the consolidated balance sheet
are reported at nominal values and represent the following
amounts:
22. Financial instruments and derivatives
31.12.2002
31.12.2003
Commitments arising from
maintenance, service and licence agreements
12,194
8,784
guarantees and sureties
701
573
furnishing collateral for third parties
375
0
1,202
0
ongoing investment projects
136
In addition, there are the following contingencies and financial
commitments:
The GfK Group concludes transactions throughout the world in
various international currencies, which may involve currency
risks. 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.
Derivative instruments are selectively used to hedge variable-rate
liabilities and to secure future payment flows. As per sfas 133,
“Accounting for Derivative Instruments and Hedging Activities”,
in conjunction with sfas 149, “Amendment of Statement 133 on
Derivative Instruments and Hedging Activities”, the GfK Group
states these at fair value on the reporting date as assets or
provisions. Any gains or losses arising from changes in fair value
are generally recognized as income or expense.
Notes: segment reporting
The counterparty risk resulting from the positive fair values of
the derivatives is deemed to be insignificant, as transactions are
only carried out with banks with top ratings.
The carrying amounts and fair values of the financial instruments
of the GfK Group are shown in the following table.
31.12. 2002
Carrying
Fair
amount
value
31.12. 2003
Carrying
Fair
amount
value
Financial instruments
other than derivatives
Financial investments
31,040
31,040
29,760
7,350
7,350
7,538
7,538
Liquid funds
45,167
45,167
53,241
53,241
72,882
72,882
66,607
66,607
Securities
29,760
Derivative financial instruments
Assets
Currency hedging contracts
0
0
19
19
Interest rate hedging
contracts
0
0
167
167
Liabilities
Currency hedging contracts
203
203
17
17
Interest rate hedging
contracts
735
735
181
181
The derivative financial instruments are valued on a marking-tomarket basis by the respective banks.
As at 31 December 2003, the GfK Group’s portfolio included
currency hedging contracts to hedge against the Japanese yen,
the Hungarian forint, the Polish zloty, the Swiss franc and the
Australian dollar. The nominal amount of the currency hedges
totalled eur 1,765 thousand, of which eur 350 thousand with
a residual term of over one year.
In addition, as at the end of the financial year, the GfK Group
had contracts to hedge against interest rate risks with a total
nominal value of eur 21,358 thousand, with a residual term
of over one year. Of this amount, a nominal volume of eur 8,500
thousand relates to interest rate swaps with a residual term of
4.5 years, which are classified as cash flow hedges.
In the case of derivatives utilized for cash flow hedging,
fluctuations in fair value are reported as other comprehensive
income. For the year under review, the amount booked under
other comprehensive income was eur 149 thousand before
taxes.
23. 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 Consumer
Tracking, Non-Food Tracking, Media, Ad Hoc Research,
HealthCare and Other.
Consumer Tracking: Information services regarding market
and marketing matters relating to day-to-day consumer buying
decisions and habits, providing information on almost all fast
moving consumer goods plus a large number of slow moving
consumer goods and services.
Non-Food Tracking: Information services regarding marketing,
sales, logistics in retail and industry for companies operating in
consumer technology markets.
Media: Information services on media consumer behaviour
and attitudes. Services include quantitative analyses of viewer,
reader and listener reach and qualitative surveys on acceptance,
preferences and recall of media content.
Ad Hoc Research: Information services for developing, positioning and maintaining products and services, aimed at optimizing
the mix of marketing policy activities and managing product and
corporate brands and customer loyalty.
HealthCare: Information services relating to product development, communication, image and price control of medicines,
market positioning and customer satisfaction, measuring the
unit number and sales of materials and products used by
dentists and laboratories as well as measuring the consumption
of veterinary medicines.
Other: Internal services relating to it and administration,
services in connection with data collection, processing and
analysis, method and product research.
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 operating profit. The operating profit of a segment is
determined on the basis of the result before financial income (excluding other income) produced by the Management Information
System. Entries at Group level due to consolidation may not be
taken into account. These are summarized in the reconciliation
to consolidated total income.
As a rule, internal Group transactions are carried out at market
prices. Sales are attributed to the countries in accordance with
the principle of country of origin.
Gains or losses from derivative financial instruments which are
not reported as part of the hedge accounting are booked in net
interest income or net other financial income respectively.
In total, the income from these financial instruments amounted
to eur 794 thousand, whilst expenses amounted to eur 17
thousand.
137
The segment information for financial years 2002 and 2003
is as follows:
Sales
2002
Operating
profit
Depreciation
Sales
2003
Operating
profit
Consumer Tracking
85,987
2,416
3,515
89,764
3,499
3,354
Non-Food Tracking
137,339
24,495
4,883
166,700
36,071
6,235
Media
Depreciation
61,280
6,051
2,862
58,293
7,480
3,073
224,513
12,814
6,001
220,824
15,423
4,265
HealthCare
35,793
4,982
1,702
49,269
6,258
1,503
Other
14,461
– 2,427
5,921
10,432
– 1,446
6,346
Total
559,373
48,331
24,884
595,282
67,285
24,776
0
– 1,076
0
0
0
0
559,373
47,255
24,884
595,282
67,285
24,776
Ad Hoc Research
Reconciliation
Group
Due to the HealthCare segment now being shown separately, the figures for the previous year have been adjusted accordingly.
Sales by region are as follows:
Germany
Northern Europe
2002
2003
204,664
221,696
59,123
54,131
196,661
204,735
28,484
31,792
America
40,366
48,601
30,075
34,327
559,373
0
559,373
Total
Reconciliation
Group
First-time consolidation of media control GfK international
GmbH, Baden-Baden
First-time consolidation of v2 GfK llc, Blue Bell, Pennsylvania, usa
2003
Actual
Pro forma
Sales
Result from ongoing
business activity
Difference
Absolute
Per cent
595,282
611,771
16,489
2.8
66,269
69,630
3,361
5.1
595,282
41,061
43,644
2,583
6.3
0
33,322
34,359
1,037
3.1
595,282
1.28
1.32
0.04
3.1
During the reporting year and in the previous year, none of the
segments recorded sales with any single client exceeding 10 %
of consolidated sales.
24. Pro forma statements in accordance with sfas 141
Due to company acquisitions and other changes in the scope of
consolidation, the previous year’s figures cannot be compared
directly with the figures for the consolidated financial statements
as at 31 December 2003. To facilitate a comparison, the influences
resulting from changes are eliminated in the following pro forma
statements in accordance with sfas 141.
The following pro forma statement prepared in accordance
with sfas 141 shows selected items from the income statement
for 2003 on the assumption that all significant acquisitions and
additional acquisitions concerning affiliated companies which
took place during the past financial year, had already taken place
on 1 January 2003. In the pro forma statement, the following
transactions are taken into account:
138
The income statement 2002 is the basis for the following pro
forma statement in accordance with sfas 141. It has been
assumed that all material changes in the scope of consolidation
that took place in 2003 had already taken place on 1 January
2002. The same events as those covered by the above pro forma
statement are taken into account.
2002
Actual
Pro forma
Sales
Difference
Absolute
Per cent
559,373
588,930
29,557
5.3
Result from ongoing
business activity
45,281
50,845
5,564
12.3
30,004
34,183
4,179
13.9
25,673
27,366
1,693
6.6
0.98
1.05
0.07
6.6
Notes: supplementary disclosures
The employees were distributed over the divisions as follows:
25. Pending litigation and claims for compensation
Neither GfK ag nor any of its subsidiaries were involved in any
significant legal disputes as at 31 December 2003.
26. Events after the balance sheet date
On 16 February 2004, negotiations for the tv research contract
with the Arbeitsgemeinschaft Fernsehzuschauerforschung
(Television Research Partnership) for Germany were successfully
concluded. The contract will run for at least seven years from
1 January 2005 to 31 December 2011. In addition, the parties to
the contract have agreed an option to extend the contract for
a further two years. The total value of the contract amounts to
more than eur 90 million.
With effect from 1 January 2004, the GfK Group acquired the
entire business of Arbor Inc., Media, usa. The business was
transferred to GfK Arbor, llc, Media, usa, which was established
at the same time. This puts GfK among the top 15 providers of
market research services in the usa.
2002
2003
Consumer Tracking
844
834
Non-Food Tracking
1,304
1,457
Media
Ad Hoc Research
332
326
1,634
1,663
HealthCare
133
192
Other
414
409
4,661
4,881
Managing Directors/Management Board members
71
75
Trainees
46
44
4,778
5,000
Full-time employees
Total remuneration and shares of the Management Board and
Supervisory Board
The total remuneration and shares of the Management Board
and Supervisory Board are as follows:
27. Changes since the previous year
The accounting and valuation methods used in the consolidated
financial statements for the previous year have been retained.
The changes in the scope of consolidation have already been
outlined above.
28. Supplementary disclosures
2003
Management Board
Supervisory Board
Fixed component
1,882
68
Variable component
1,119
100
Stock options (No.)
663,605
–
Shares (No.)
411,006
167,375
Management Board
Supervisory Board
Personnel expenses – information pursuant to § 314 Para. 1
No. 4 hgb (German Commercial Code)
The expense items of the income statement contain the following
personnel expenses:
2002
Fixed component
Variable component
2002
Wages and salaries
Social security contributions
Personnel expenses
199,030
2003
210,180
45,090
46,464
244,120
256,644
Number of employees
The GfK Group employed 5,000 (2002: 4,778) staff on average
during the year under review. The average number of employees
over the year was determined on the basis of full-time employees.
The calculation of the average was carried out using the key
dates 31 March, 30 June, 30 September and 31 December.
1,756
68
766
84
Stock options (No.)
530,273
–
Shares (No.)
410,626
178,283
Former members of the management of GfK GmbH, Nuremberg,
and of the Management Board of GfK ag, received total
remuneration of eur 716 thousand (2002: eur 578 thousand);
an amount of eur 8,458 thousand (2002: eur 8,255 thousand)
was set aside by GfK ag for pension commitments to former
members of the Management Board and Managing Directors.
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.
139
Supervisory Board
Peter Zühlsdorff
Chairman
Managing Director of Bewerbungskomitee
Leipzig 2012 GmbH, Leipzig
Managing shareholder of dih Deutsche
Industrie-Holding GmbH, Frankfurt/Main
Chairman of the Supervisory Board of
Merck KGaA, Darmstadt
Escada ag, Munich
Member of the Supervisory Board of
Deutz ag, Cologne
Kaiser’s Tengelmann ag, Viersen
TV Loonland ag, Munich
Chairman of the Board of Administration of
GfK-nürnberg Gesellschaft für Konsum-,
Markt- und Absatzforschung e.V., Berlin
Klaus Hehl
Peter Danzl
(until 13 June 2003)
Kerstin Döpfert
Independent Works Council representative
(from 21 May 2003) at GfK Aktiengesellschaft, Nuremberg
Hans-Jürgen
Kunert
Robert Raeber
Hajo Riesenbeck
Director at McKinsey & Company,
Düsseldorf
Deputy Chairman
Market Researcher
Member of the Board of Administration of
Dieter Wilbois
Independent Works Council representative
(Chairman) at GfK Aktiengesellschaft,
Nuremberg
Elmar
Wohlgensinger
Marketing Researcher
Dr. Christoph
Chairman of the Management Board
Achenbach
of Quelle Aktiengesellschaft, Fürth
(from 13 June 2003) and Neckermann Versand ag,
Frankfurt/Main
Member of the Management Board of
karstadt quelle ag, Essen
Kaiser’s Tengelmann ag, Viersen
Neckermann Versicherung ag, Fürth
Neckermann Lebensversicherung ag, Fürth
Member of the comparable controlling body
of karstadt quelle Information Service GmbH,
Essen
Jörg Bandt
Scope Data Collection Manager,
(from 21 May 2003) GfK Aktiengesellschaft, Nuremberg
Dr. Wolfgang
C. Berndt
Chairman of the Board of Directors of the
Institute For The Future, Menlo Park,
California, usa
Cadbury Schweppes plc, London, uk
Lloyds tsb Bank plc, London, uk
Lloyds tsb Group plc, London, uk
140
Management Consultant
President of the Board of Administration of
Weibel Hess & Partner ag, Stans,
Switzerland
Eiphos Holding ag, Hergiswil, Switzerland
Telecontrol ag, Hergiswil, Switzerland
Modata ag, Hergiswil, Switzerland
Liechti ag, Kriegstetten, Switzerland
GfM Schweiz, Gesellschaft für Marketing,
Zurich, Switzerland
wnw Immobilien ag, Ennetbürgen,
Switzerland
rex Sport & Freizeit Center, Stans,
Switzerland
Hergiswiler Glas ag, Hergiswil, Switzerland
hotelguide.com, Sursee, Switzerland
active light GmbH, Stans, Switzerland
Agnes Waser Immobilien ag, Kilchberg,
Switzerland
Darum Holding ag, Stansstad, Switzerland
Central Swiss Chamber of Commerce,
Lucerne, Switzerland
Notes: Supervisory Board and Management Board
Management Board
Dr. Klaus L.
Wübbenhorst
Chief Executive Officer
Deputy Chairman of the
Board of Administration of R. Oldenbourg
GmbH & Co. kg, Munich
Chairman of the Board of Directors of
GfK Holding, Inc., Wilmington, usa
Procon GfK Arastirma Hizmetleri a.s.,
Istanbul, Turkey
Petra Heinlein
Dr. Franz X. Merl
Responsible for the Financial Services,
Central Services and Personnel Services
divisions
Wilhelm R.
Wessels
GfK InfoScan Sverige ab, Lund, Sweden
m2a s.a., Saint Aubin, France
Dr. Gérard Hermet Responsible for the Non-Food Tracking
division
Heinrich A.
Litzenroth
Responsible for the Ad Hoc Research
division
Responsible for the Consumer Tracking
and HealthCare divisions
GfK Norge a/s, Oslo, Norway
GfK Sverige ab, Lund, Sweden
GfK Danmark a/s, Frederiksberg, Denmark
Responsible for the Media division
g.e. Marketing Research, s.a., Valencia,
Spain
GfK Marketing Services s.a.,
Rueil-Malmaison, France
GfK Sofema International sarl,
Financière isl s.a., Issy les Moulineaux,
France
Institut de Sondage Lavialle (isl) s.a.,
Issy les Moulineaux, France
ifr France s.a., Viroflay, France
Chief Financial Officer
Information Resources – GfK b.v.,
Zaltbommel, Netherlands
GfK Panelservices Benelux b.v., Dongen,
Netherlands
Declaration on the German Corporate Governance Code
The declaration prescribed by § 161 of
the German Stock Corporation Act has
been given by the Management Board
and Supervisory Board and has been
made accessible to shareholders.
Chairman of the Board of Administration of
GfK consumer and business
information italy S.p.A., Milan, Italy
Deputy Chairman of the Supervisory Board
of GfK macon ag, Waghäusel
Dr. Franz X. Merl
Indicorp Participações s.a., São Paulo, Brazil
MarketingScan snc, Rueil-Malmaison,
France
GfK Ad Hoc Research worldwide, Brussels,
Belgium
Petra Heinlein
Dr. Gérard Hermet
Heinrich A. Litzenroth
Wilhelm R. Wessels
141
Shareholdings of the GfK Group
Share in the capital Financial year
in %
Equity
eur’000
Affiliated companies (Germany) included in the consolidated financial
statements (all details according to hgb commercial balance sheet i)
encodex International GmbH, Nuremberg
95.0
2003
-55 1)
enigma GfK Medien- und Marketingforschung GmbH, Wiesbaden
100.0
2003
663
GfK cee Finance GmbH, Nuremberg
100.0 3)
2003
3,189
51.0
2003
GfK macon ag, Waghäusel
GfK Marketing Services GmbH & Co. kg, Nuremberg
GfK Non-Food Tracking Holding GmbH, Nuremberg
854 2)
3)
2003
560
95.0 8)
2003
134,810
100.0
GfK prisma Institut für Handels-, Stadt- und Regionalforschung
GmbH & Co. kg, Hamburg
100.0
2003
405
GfK u.s. Equity GmbH, Nuremberg
100.0
2003
3,427 1)
1,013
gpi Kommunikationsforschung Gesellschaft für PharmaInformationssysteme mbH, Nuremberg
80.0
2003
media control GfK international GmbH, Baden-Baden
51.0 4)
2003
953 2)
Media Markt Analysen GmbH & Co. kg, Frankfurt/Main
100.0
2003
25
Modata GmbH, Berlin
100.0 3)
2003
84 2)
Adware Media Solutions b.v., Hilversum, Netherlands
100.0 3)
2003
– 178
Aspemar-GfK Société Anonyme, Brussels, Belgium
100.0 3)
2003
– 183
audimedia sarl, Issy les Moulineaux, France
100.0 3)
2003
1,400
77.8 3)
2003
693
100.0 3)
2003
3,632
50.1
2003
2,256
Affiliated companies (abroad) included in the consolidated financial
statements (all details according to us gaap commercial balance sheet ii)
Audimetrie n.v., Brussels, Belgium
emer GfK, s.l., Valencia, Spain
Encodex Japan k.k., Osaka, Japan
63.0
2003
– 395
fessel-GfK Institut für Marktforschung Ges.m.b.H., Vienna, Austria
94.8
2003
8,628
Financière isl Société Anonyme, Issy les Moulineaux, France
71.9 3)
2003
3,518
g.e. Marketing Research, s.a., Valencia, Spain
50.1 3)
2003
6,397
GfK - Centar za istrazivanje trzista d.o.o., Zagreb, Croatia
100.0 3)
2003
– 431
GfK - memrb Marketing Services Limited, Nicosia, Cyprus
60.0 3)
2003
229
GfK (u.k.) Ltd., West Byfleet, Surrey, uk
100.0 3)
2003
7,068
GfK Animal Healthcare Limited, West Byfleet, Surrey, uk
100.0
2003
10,931
89.5 3)
2003
992
3)
2003
2,453
GfK consumer and business information italy S.p.A.,
Milan, Italy
100.0
2003
121
100.0 3)
2003
5,254
GfK Asia Pte Ltd., Singapore, Singapore
GfK Benelux Marketing Services b.v., Amstelveen, Netherlands
GfK Danmark a/s, Frederiksberg, Denmark
100.0
87.0
2003
701
GfK Great Britain Ltd., London, uk
100.0 3)
2003
– 38
100.0
2003
26,417
GfK Hungaria Piackutató Kft., Budapest, Hungary
100.0 3)
2003
797
GfK Immobilier Société a responsabilité limitée, Rueil-Malmaison,
France
100.0 3)
2003
9
GfK Market Research (Shanghai) Co. Ltd., Shanghai, China
100.0 3)
2003
319
GfK Marketing Services (Malaysia) Sdn. Bhd., Kuala Lumpur, Malaysia
100.0 3)
2003
281
49.0 3)
2003
5
100.0 3)
2003
1,291
89.5 3)
2003
227
GfK Marketing Services Italia S.r.l., Milan, Italy
100.0 3)
2003
2,138
1) Profit and loss transfer agreement
2) Details as per commercial balance
sheet II
3) Fully indirect shareholding
7) Share capital (excluding non-voting participation certificates)
8) Newly established in 2003
9) In liquidation
GfK Marketing Services (Thailand) Limited, Bangkok, Thailand
GfK Marketing Services Australia Pty. Ltd., Sydney, Australia
GfK Marketing Services Hong Kong Limited, Hong Kong, China
142
3)
4) Partially indirect shareholding
5) Details not available
6) Details as per provisional financial statements
drawn up under national law
Notes: shareholdings
in %
Equity
eur’000
84.2 3)
2003
4,935
GfK Marketing Services Korea Limited, Seoul, Korea
100.0 3)
2003
– 1,139
GfK Marketing Services Ltd., Hong Kong, China
100.0 3)
2003
1,130
GfK Marketing Services Ltd., West Byfleet, Surrey, uk
100.0 3)
2003
5,140
GfK Marketing Services Société Anonyme, Rueil-Malmaison, France
100.0 3)
2003
2,704
GfK Media Ltd., London, uk
100.0 8)
2003
– 198
GfK Norge a/s, Oslo, Norway
100.0
2003
304
GfK Panelservices Benelux b.v., Dongen, Netherlands
100.0 3)
2003
4,581
92.4
GfK Marketing Services Japan k.k., Tokyo, Japan
GfK Panelservices Benelux Holding b.v., Dongen, Netherlands
2003
6,186
3)
2003
1,645
80.0 3)
2003
1,527
GfK Praha, s.r.o., Prague, Czech Republic
100.0 3)
2003
1,118
GfK Romania-Institut de Cercetare de Piata Srl, Bucharest, Romania
100.0 3)
2003
81
GfK Slovakia Inštitút pre prieskum trhu s r.o., Bratislava,
Slovakia
100.0 3)
2003
253
GfK Sofema International sarl, Rueil-Malmaison, France
100.0
2003
5,402
GfK Sverige Aktiebolag, Lund, Sweden
100.0
2003
460
GfK-Bulgaria, Institut für Marktforschung EGmbH, Sofia, Bulgaria
100.0 3)
2003
120
GfK-rus Gesellschaft mbH, Moscow, Russia
100.0 3)
2003
147
GfK-Ukrainian Surveys & Market Research (usm), Kiev, Ukraine
100.0 3)
2003
549
70.0 4)
2003
365
100.0 3)
2003
1,010
ifr Italia S.r.L., Milan, Italy
70.0 4)
2003
320
ifr Marketing España s.a., Madrid, Spain
70.0 4)
2003
303
GfK Polonia Instytut Badania Opinii Sp. z o.o., Warsaw, Poland
GfK portugal – Marketing Services, Limitada, Lisbon, Portugal
ifr Europe Ltd., London, uk
100.0
100.0
2003
322
100.0 7)
2003
33,020
75.0 3)
2003
144
Inform Business Development Pty. Ltd., Sydney, Australia
100.0 3)
2003
– 102
Informark Pty. Ltd., Braddon, Australia
100.0 3)
2003
116
Institut de Recherche d’Informations statistiques (irdis) sarl,
Montigny le Bretonneux, France
95.0 3)
2003
70
Institut de Sondage Lavialle (isl) s.a., Issy les Moulineaux, France
99.9 3)
2003
2,356
Institut Français de Recherche-ifr s.a., Viroflay, France
51.4
2003
9,371
intercampus-recolha, tratamento e distribuição
de informação, Limitada, Lisbon, Portugal
50.1 3)
2003
158
Intomart b.v., Hilversum, Netherlands
100.0 3)
2003
4,811
Intomart GfK Belgium n.v., Brussels, Belgium
100.0 3)
2003
2,241
Intomart GfK Group b.v., Hilversum, Netherlands
100.0
2003
2,893
100.0 3)
2003
2,013
market analysis e.p.e., Athens, Greece
80.0 4)
2003
231
Martin Hamblin GfK Limited, London, uk
51.0
2003
– 807
Martin Hamblin Research Inc., Hartford, Connecticut, usa
100.0 3)
2003
910
metris-métodos de recolha e investigação social, lda,
Lisbon, Portugal
51.0 3)
2003
168
mmo Media-Market-Observer GmbH & Co kg, Vienna, Austria
54.6 3)
2003
– 604
100.0 3)
2003
941
Orange Interactive Research ab, Stockholm, Sweden
100.0 3)
2003
497
51.0 3)
2003
– 278
incoma Research, s.r.o., Prague, Czech Republic
Oz Toys Marketing Services Pty. Ltd., Sydney, Australia
Procon GfK Arastirma Hizmetleri a.s., Istanbul, Turkey
70.1
2003
1,410
pt GfK Marketing Services Indonesia, Jakarta, Indonesia
100.0 3)
2003
42
sheet II
9) In liquidation
143
in %
Equity
eur’000
100.0 3)
2003
0
Significant GfK bvba, Heverlee, Belgium
67.3 3)
2003
569
Strateji GfK Research Services a.s., Istanbul, Turkey
99.6 3)
2003
236
100.0 3)
2003
2,311
2003
2,500
Romtec-GfK Ltd., Maidenhead, Berkshire, uk
v2 GfK llc, Blue Bell, Pennsylvania, usa
51.0 3) 8)
Affiliated companies (Germany), not included in the consolidated
financial statements (all details according to hgb commercial balance sheet I)
GfK Data Services GmbH, Nuremberg
100.0
2003
28
GfK Fernsehforschung GmbH, Nuremberg
100.0
2003
28
GfK International Consultancy & Development GmbH, Nuremberg
100.0
2003
12
GfK Marketing Services Verwaltungs-GmbH, Nuremberg
100.0 3)
2003
28
GfK Marktforschung GmbH, Nuremberg
100.0
2003
28
GfK Panel Services Consumer Research GmbH, Nuremberg
100.0
2003
28
GfK prisma Verwaltungs-GmbH, Hamburg
100.0
2003
30
2003
84 6)
2003
28
100.0 3)
2003
654 6)
Borell Market Research ab, Stockholm, Sweden
100.0
3)
2003
– 335 2) 9)
caticall – recolha de informação assistida por
computador, lda, Lisbon, Portugal
100.0 3)
2003
5 2)
100.0
3)
2003
40 6)
100.0
3)
2003
85.0
8)
ifr Monitoring Deutschland GmbH, Düsseldorf
Media Markt Analysen Verwaltungs-GmbH, Frankfurt/Main
70.0 4)
100.0
Affiliated companies (abroad), not included
in the consolidated financial statements
Adfinders b.v., Hoofddorp, Netherlands
cmi Field sarl, Viroflay, France
dragon eye Ltd., Hergiswil, Switzerland
GfK - european opinion research centre eeig, Brussels, Belgium
5)
75.6 3)
2003
0 6)
GfK Belgium s.a., Brussels, Belgium
100.0 3)
2003
585 6)
GfK Belgrade d.o.o., Belgrade, Federal Republic of Yugoslavia
100.0 3)
2003
74 2)
GfK do Brasil s/c Ltda., São Paulo, Brazil
100.0
GfK Ad Hoc Research worldwide eig, Brussels, Belgium
GfK InfoScan Sverige ab, Lund, Sweden
GfK Marketing Services South Africa (Proprietary), Sandton, South Africa
GfK npd Marketing Services Worldwide b.v., Amstelveen, Netherlands
GfK Panel Arastirma Hizmetleri a.s., Istanbul, Turkey
GfK Stratégie et développement Groupement d'interest Economique,
gral-iteo tržne raziskave d.o.o., Ljubliana, Slovenia
ifr Nederland b.v., Amsterdam, Netherlands
ifr Polska Sp. z o.o., Warsaw, Poland
ifr u.k. Ltd., London, uk
Intomart DataCall b.v., Hilversum, Netherlands
2003
5)
92.0
3)
2003
69 2)
100.0
3)
2003
5)
2003
– 21 6)
3)
2003
36 6)
100.0 3)
2003
78 6)
100.0
3)
2003
1 6)
70.0
4)
2003
41 6)
100.0
3)
2003
14 6)
75.0
93.5
71.3 4)
2003
– 44 6)
100.0 3)
2003
337 6)
3)
Media Control ag, Zurich, Switzerland
100.0
2003
45
Media Control Marketing Research España, s.l., Madrid, Spain
100.0 3) 8)
2003
– 53 6)
mmo Media-Market-Observer GmbH, Vienna, Austria
100.0 3)
2003
41 6)
80.2
3)
2003
– 99 6)
100.0
3)
2003
0 6)
ps - Martin Hamblin Limited, London, uk
100.0
3)
2003
– 74 6)
sheet II
9) In liquidation
mmxi Switzerland GmbH, Hergiswil, Switzerland
Procon GfK Ltd., Baku, Azerbaijan
144
– 256 6)
5)
Notes: shareholdings
in %
Equity
eur’000
Associated companies (Germany) (all details according
to hgb commercial balance sheet i)
Consumerscope International gie, Nuremberg
5)
40.0
Ernst und GfK Grundstücksgesellschaft, Nuremberg
50.0
2003
Information Resources GfK GmbH, Nuremberg
17.7
2003
5)
358
5)
Associated companies (abroad)
Brand Index vof, Hilversum, Netherlands
33.3 3) 8)
5)
bwv Holding ag, St. Gallen, Switzerland
92.0
3)
2003
Caribou Lake Software, llc, Minneapolis, usa
19.9 3)
2003
3)
5)
Europanel Raw Database gie, Brussels, Belgium
50.0
5)
European Flash Surveys eeig, Brussels, Belgium
50.0
5)
49.0
i + g Infratest Medical Research Inc., Rhode Island, usa
50.0
– 540 2)
5)
25.0
GfK-Media Research Middle East ag, Hergiswil, Switzerland
– 3,583
5)
Common Technology Centre eeig, London, uk
3)
5)
6)
2003
5)
40
2)
4,274
2)
5)
5) 9)
iha·ims Health GmbH, Hergiswil, Switzerland
50.0
3)
2003
incoma Consult, s.r.o., Prague, Czech Republic
19.5 3)
2003
76 2)
3)
2003
703 2)
2003
5)
Indicorp Participações s.a., São Paulo, Brazil
19.9
Information Resources-GfK b.v., Dongen, Netherlands
19.9
3)
5)
5)
Jan Schipper Compagnie b.v., Bussum, Netherlands
20.0
m2a s.a., Saint Aubin, France
35.0
2003
346 2)
MarketingScan snc, Rueil-Malmaison, France
50.0
2003
3,063 2)
Media Focus (arge), Hergiswil, Switzerland
50.0 3)
2002/2003
395 2)
net survey szonda ipsos és GfK Hungária Internet Kutató
Intézete Kft., Budapest, Hungary
50.0 3)
2003
npd Intelect, l.l.c., Port Washington, New York, usa
25.03)
2002/2003
13,374 6)
org-GfK Marketing Services (India) Private Limited, Mumbai, India
40.0 3)
2002/2003
265 6)
Sports Tracking Europe b.v., Amstelveen, Netherlands
25.0
2002/2003
– 1,055 2)
St. Mamet Saisie Informatique (smsi) sarl, Saint Mamet-la Salveta,
France
20.0 3)
ufo Veld b.v., Amsterdam, Netherlands
Unified Fieldwork Organisation ufo v.o.f., Amsterdam, Netherlands
v.o.f. Projectbureau Politiemonitor, Hilversum, Netherlands
2003
11 2)
467 2)
50.0
3)
5)
5)
50.0
3)
5)
5)
50.0
3)
5)
5)
Other participations (abroad)
Bureau voor Reclame Statistiek Hoofddorp b.v., Hoofddorp, Netherlands
iri Infoscan Ltd., Maidenhead, Berkshire, uk
sheet II
49.0 3)
5)
5)
4)
5)
5)
5.8
9) In liquidation
145
Notes to the consolidated financial statements pursuant
to § 292a hgb
Accounting in accordance with us gaap, which is the method
applied by the GfK Group, differs from accounting under hgb
(German Commercial Code).
Any differences which have a material impact on the consolidated
financial statements of the GfK Group are explained below.
Intangible assets
In accordance with hgb, only intangible assets acquired for
consideration may be capitalized. In accordance with us gaap,
self-produced intangible assets must be capitalized in specific
circumstances (especially software).
Reporting unrealized profits
In accordance with hgb, the principle of prudence does not
permit the inclusion of unrealized profits, but requires unrealized
losses to be stated as soon as they can be anticipated. us gaap
permits the inclusion of unrealized profits.
For assets and liabilities in foreign currencies, this means that in
accordance with us gaap these need to be converted at the rate
of exchange on the reporting date. In principle, exchange gains
and losses are taken to the income statement.
hgb provides no specific provisions for the valuation of derivative
instruments, so that the general principles of valuation at
acquisition cost and of the principle of prudence apply. In
accordance with us gaap, derivative instruments must be
valued at their fair value on the balance sheet date. Special
rules apply to hedging transactions.
Goodwill
In principle, goodwill from the first-time consolidation of
subsidiaries is determined similarly in both accounting systems. In
accordance with hgb, there is the option to either offset goodwill
against reserves with no impact on the result and disclose this
or to write down over the anticipated useful life or over four
years by means of regular amortization. In accordance with us
gaap, goodwill should not be subject to regular amortization
but should be subject to an annual impairment test, which may
involve the application of extraordinary amortization.
Leases
The criteria in accordance with which in hgb accounting a leased
asset must be capitalized by the lessee are based on taxation
rules. They therefore differ from the criteria of us gaap. As a
result, capitalization duties for the lessee under us gaap (capital
leases) are more extensive than under hgb.
Reinstatement of original values
In certain cases, it is prescribed in accordance with hgb that
write-downs of an asset to a lower attributable value must be
reversed by reinstating the original value when the reasons for
the earlier write-down cease to exist. us gaap does not permit
the reinstatement of original values.
Recognition of sales
In accordance with hgb, a sale may only be recognized when the
service has been completed and invoiced. Ongoing orders are
reported as inventories until such time. In accordance with us
gaap, the recognition of sales is determined by the portion of
the service that has already been delivered. Sales may therefore
also be recognized before the completion of the service to be
delivered and when services have not yet been invoiced.
146
Provisions for pensions and similar obligations
In accordance with hgb, the valuation of pension obligations is
largely carried out applying the partial value method pursuant to
§ 6 a EStG (German Income Tax Act), but other methods are also
permissible. In accordance with us gaap, the application of the
projected unit credit method is mandatory. In contrast with hgb,
future salary rises of the person entitled to the pension are taken
into account. Entitlements in respect of pension funds are offset
against the provision. In accordance with us gaap, an allocation
to the pension provisions that initially has no impact on income
is possible in some cases.
Other provisions
hgb permits the setting up of provisions for amounts owed to
third parties as well as for internal costs such as for example
maintenance (provisions for operating expenditure). Provisions
must be valued according to the principle of prudence. In
accordance with us gaap, provisions for operating expenditure
are not permitted. Provisions must be valued at the amount
that will most probably be used. If several equally probable
amounts exist, the lowest of the range must be stated.
In accordance with hgb, invoices for prepayments or payments
on account which have not been paid by the balance sheet
date may not be stated as payments on account received. The
underlying receivable must also be eliminated, because this is
a pending transaction for both sides. Given the different way of
realizing sales, receivables from pending transactions may be
reported in accordance with us gaap. Liabilities arising from
work in progress include accrued sales which have resulted from
invoices for prepayments or payments on account, but cannot
yet be recognized as sales in accordance with the method of
realizing sales. The accrued amounts may be matched both by
open as well as by already settled receivables.
Notes: consolidated financial statements
Scope of consolidation
In accordance with hgb, subsidiaries are included in the
consolidated financial statements if the parent company holds
the majority of the voting rights or if the companies are under
the uniform control of the parent company. A company is
assumed to be an associated company if, in the event of a
participation quota of at least 20 %, a determining influence
is actually exercised on its business and financial policies. In
accordance with us gaap, the consolidation of subsidiaries
depends on the possibility of control being exercised by the
parent company. The rights of minority shareholders in
particular have to be examined to determine whether they
hinder the control by the parent company. A minimum
participation of 20% in accordance with us gaap is not a
precondition for qualification as an associated company. By
contrast with the corresponding hgb provision, it is only a
question of the possibility of exercising a determining influence.
Minority interests
The minority interests in accordance with hgb are included
in the consolidated shareholders’ equity. In accordance
with us gaap, these are reported in a separate item between
shareholders’ equity and liabilities.
147
AUDITORS’ REPORT
We have audited the consolidated financial statements, comprising
the balance sheet, the income statement and the statements
of changes in shareholders’ equity and cash flows as well as the
notes to the financial statements prepared by the GfK Aktiengesellschaft, Nuremberg for the business year from 1 January 2003
to 31 December 2003. The preparation and the content of the
consolidated financial statements in accordance with Accounting
Principles Generally Accepted in the United States of America
(us gaap) are the responsibility of the Company’s management.
Our responsibility is to express an opinion on these consolidated
financial statements based on our audit.
We conducted our audit of the consolidated financial statements
in accordance with German auditing regulations 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 it can be assessed with reasonable assurance whether
the consolidated financial statements are free of material
misstatements. Knowledge of the business activities and the
economic and legal environment of the Group and evaluations
of possible misstatements are taken into account in the
determination of audit procedures. The evidence supporting the
amounts and disclosures in the consolidated financial statements
is examined on a test basis within the framework of the audit.
The audit includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating
the overall presentation of the consolidated financial statements.
We believe that our audit provides a reasonable basis for our
opinion.
148
In our opinion, the consolidated financial statements give a true
and fair view of the net assets, financial position, results of
operations and cash flows of the Group for the business year in
accordance with Accounting Principles Generally Accepted in
the United States of America.
Our audit, which also extends to the group management report
prepared by the Company’s management for the business year
from 1 January 2003 to 31 December 2003, has not led to any
reservations. In our opinion on the whole the group management
report provides a suitable understanding of the Group’s position
and suitably presents the risks of future development. In addition,
we confirm that the consolidated financial statements and the
group management report for the business year from 1 January
2003 to 31 December 2003 satisfy the conditions required for
the Company’s exemption from its duty to prepare consolidated
financial statements and the group management report in
accordance with German law.
kpmg Deutsche Treuhand-Gesellschaft
Aktiengesellschaft
Wirtschaftsprüfungsgesellschaft
Kozikowski
(German Public Auditor)
Renner
(German Public Auditor)
ADDITIONAL
I N F O R M AT I O N
150
152
Glossary of financial terms
Short-form company names used in the
management report
153
Glossary of specialist marketing terms
156/V GfK Group: five-year overview
VI
VII
VII
Index
Financial calendar
Contacts
GLOSSARY OF FINANCIAL TERMINOLOGY
A
D
G
Affiliated companies
Companies which are controlled by the
parent company. As a rule, the parent
company holds the majority of the voting
rights and capital of the company.
Deferred taxes
Tax assets or charges reported in the
balance sheet to equalize the difference
between the tax debt actually assessed
and the commercial tax burden based
on the accounting in accordance with us gaap 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 us gaap
and the local tax balance sheet.
Gearing
Ratio of net indebtedness to shareholders’
equity.
Asset structure
The asset structure describes the
relationship between fixed 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.
C
Cash flow
Balance of funds inflow and outflow
affecting payment.
Cost of sales
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
Assets intended for short-term use in
business operations.
Dividend yield
Dividend per share in relation to the
annual closing price.
E
ebit
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.
ebit margin
ebit in relation to sales. The higher the
indicator, the higher the earnings power.
Equity ratio
On balance sheet equity in relation to total
assets. The higher the indicator, the lower
the level of indebtedness.
Goodwill
Intangible business asset that represents
the value of the existing organization,
its image, client base etc. at the time of
acquisition of a company. Calculation:
purchase price of the company less pro
rata net worth.
Gross income from sales
Sales less cost of sales.
I
Income from participations
Contains the items income from
participations, profits and losses
on the disposal of participations and
depreciation on participations.
L
Liquidity ratio i
Liquid funds and securities held
as current assets in relation to short-term
liabilities.
Liquidity ratio ii
Total from liquid funds, securities held as
current assets and short-term receivables
and assets in relation to the total from
short-term liabilities and liabilities from
work in progress.
Liquidity level iii
Current assets in relation to the total from
short-term liabilities and liabilities from
work in progress.
F
Fixed assets
Assets intended for ongoing use in
business operations.
M
Free cash flow
Cash flow from ongoing business activity
less maintenance and replacement
expenses.
Minority participations
Generic term for associated companies
and other participations. The
participation quota is below 50 %.
Free float
Free float is the portion of shares in a joint
stock company measured in terms of the
total number of shares issued, which is
not held by major shareholders. At GfK,
36 per cent of the share capital is in free
float.
N
Majority participations
Affiliated companies
Net indebtedness
Liquid funds and securities held as current
assets less pension liabilities and financial
liabilities.
Glossaries
Net interest income
Interest income less interest expenses.
This item includes interest income and
expenses on bank credits and liabilities,
loans, securities, liabilities under leases
and other accounts receivable and payable.
O
Operating income
Gross income from sales less sales
and general administrative expenses.
Operating profit
Sales less operating costs according to the
Management Information System. The
most important internal income indicator.
Other expenses
Expenses in connection with ongoing
business activity, excluding financial
expenses not attributable to cost of
sales or sales and general administrative expenses. Examples are losses
from the disposal of fixed assets and
exchange losses.
Other financial income
Financial income which is not attributable
to income from participations or net
interest income. Examples are profits or
losses on the disposal of securities and
write-downs on loans.
Other income
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.
Other participations
Companies in which a participation is held
but on whose business policy no decisive
influence is exercised. The participation
quota is below 20 %.
OT H E R I N F O R M AT I O N
Profit to sales ratio
Consolidated total income before minority
interests in relation to sales.
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.
S
Sales and general administrative
expenses
Operating costs which are not directly
related to individual client orders such
as costs for general marketing measures
and for accounting.
Stock option programme
Profit-sharing programme for managers,
whereby managers waive variable salary
components and instead receive options.
Options can be exercised at the earliest
after two years within set periods. In order
for options to be received, the managers
entitled must achieve individually agreed
targets.
T
Tax ratio
Taxes on income and earnings in relation
to income from ongoing business activity.
Total return on equity
ebit after income from participations in
relation to average total assets.
U
us gaap
Abbreviation for United States Generally
Accepted Accounting Principles.
P
Pay-out ratio
Total dividend in relation to consolidated
total income.
151
S H O R T- F O R M G f K C O M PA N Y N A M E S
Borell Market Research, Sweden
Borell Market Research ab, Stockholm,
Schweden.
GPI Kommunikationsforschung,
Germany
gpi Kommunikationsforschung
Gesellschaft für Pharma-Informationssysteme mbH, Nuremberg, Germany.
bwv Gruppe, Switzerland
bwv it solutions ag, St. Gallen, Switzerland
dm michelotti ag, Rotkreuz, Switzerland.
Gral Iteo, Slovenia
gral-iteo tržne raziskave d.o.o.,
Ljubliana, Slovenia.
C
I
Caribou Lake Software, usa
Caribou Lake Software, llc, Minneapolis,
usa.
ifr, France
Institut Français de Recherche ifr s.a.,
Viroflay, France.
B
G
GfK Ad Hoc Services, Germany
GfK Aktiengesellschaft, Bereich Ad Hoc
Services, Germany.
GfK AG, Germany
GfK Aktiengesellschaft, Nuremberg,
Germany.
GfK Animal Health uk
GfK Animal Healthcare Limited, West
Byfleet, Surrey, uk.
GfK arbor usa
GfK arbor, llc, Media, usa.
GfK Custom Research, usa
GfK Custom Research Inc., Minneapolis,
usa.
GfK Data Services/bsp, Germany
GfK Aktiengesellschaft, GfK Data
Services and GfK Business Solutions &
Processing, Germany.
GfK do Brasil, Brazil
GfK do Brasil s/c Ltda., São Paulo, Brazil.
GfK HealthCare, Germany
GfK Aktiengesellschaft, HealthCare,
Germany.
GfK Marktforschung, Germany
GfK Marktforschung GmbH, Nürnberg,
Germany.
GfK Media, uk
GfK Media Ltd., London, uk.
GfK Non-Food Tracking Holding,
Germany
GfK Non-Food Tracking Holding GmbH,
Nuremberg, Germany.
152
ifr-Gruppe, France
cmi Field sarl, Viroflay, France
Institut Français de Recherche ifr s.a.,
Viroflay, France
ifr Europe Ltd., London, uk
ifr Italia S.r.L., Milan, Italy
ifr Marketing España s.a., Madrid,
Spain
ifr Monitoring Deutschland GmbH,
Düsseldorf, Germany
ifr Nederland b.v., Amsterdam,
Netherlands
ifr Polska Sp. z o.o., Warsaw, Poland
ifr u.k. Ltd., London, uk.
iha·ims GfK Health, Switzerland
iha·ims Health GmbH, Hergiswil,
Switzerland.
iha-GfK-Gruppe, Switzerland
iha·ims Health GmbH, Hergiswil,
Switzerland
dragon eye Ltd., Hergiswil, Switzerland
Media Focus (arge), Hergiswil,
Switzerland
Modata GmbH, Berlin, Germany
Telecontrol ag, Hergiswil, Switzerland.
Inform Business Development, Australia
Inform Business Development Pty. Ltd.,
Sydney, Australia.
Infratest + GfK Gesundheitsforschung,
Germany
Infratest + GfK Gesundheitsforschung
GmbH & Co., Berlin, Germany.
IRI/GfK, Germany
Information Resources GfK GmbH,
Nuremberg, Germany.
J
Jupiter Media Metrix, usa
Jupiter Media Metrix Inc., usa.
M
m2a, France
m2a s.a., Saint Aubin, France.
Martin Hamblin GfK, uk
Martin Hamblin GfK Limited, London, uk.
Martin Hamblin GfK Research Inc, usa
Martin Hamblin Research Inc., Hartford,
Connecticut, usa.
media control GfK International,
Germany
media control GfK international GmbH,
Baden-Baden, Germany.
mmxi Europe, Netherlands
mmxi Europe b.v., Amsterdam,
Netherlands.
N
npd Group, usa
The npd Group, Inc., Port Washington,
New York, usa.
P
Procon GfK, Turkey
Procon GfK Arastirma Hizmetleri a.s.,
Istanbul, Turkey.
S
Significant GfK, Belgium
Significant GfK bvba, Heverlee, Belgium.
T
Telecontrol, Switzerland
Telecontrol ag, Hergiswil, Switzerland.
V
v2 GfK, usa
v2 GfK llc, Blue Bell, usa.
Glossaries
GLOSSARY OF SPECIALIST MARKETING TERMS
A
Ad Hoc Research
Systematic, empirical research, used
as the basis for marketing decisions.
Ad Hoc Research is one of GfK’s business
divisions.
Advertising effectiveness research
Analysis of the success of an advertising
measure in terms of brand awareness,
advertising recall and, in the case of
recalled elements, media-specific
advertising recall and attitudes towards
the advertised product. This is the basis
for changing the recording values in line
with specific endogenous or exogenous
factors.
Below-the-line marketing
Collective term for types of marketing
other than the classical types such as
press, radio, tv, cinema and outdoor
advertising. In concrete terms, this means
sales promotions, mailshots, point of sale
advertising etc.
Brand and campaign controlling
Standard instrument for the continuous
measurement of the advertising effectiveness of campaigns, generally broken down
into advertising resonance, advertising
recall, brand awareness, ad awareness,
recall of advertising details for individual
brands, slogans, images etc.; advertising
effectiveness research.
Advertising test
Testing of ads, commercials and other
advertising media before or after they are
published or shown.
Brand Simulator
A model based on consumer panel data,
used to optimize the marketing mix.
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.
Category Management
A concept whereby manufacturers and
retailers set joint marketing targets and
develop strategies for a particular product
category and then endeavour to realize
these. The aim is to increase sales and
income.
agf/GfK tv panel
tv panel.
CatmanGuide
GfK services for Category Management
of fast moving consumer goods.
atracktive
A software package used to carry out
standard and one-off analyses of data from
the consumer panel ConsumerScan.
aTRACKtive*web is the Internet-compatible
version of aTRACKtive, giving clients and
employees anywhere in the world access
to the ConsumerScan databases at any
time.
Consumer Tracking
A survey of households and individual
consumers that is repeated at regular
intervals: Consumer Tracking is one of
GfK’s business divisions; tracking,
panel, household panel, ECPO.
Customer loyalty research
Surveys to measure and improve
customer satisfaction and customer
loyalty.
Customer segmentation
Market segmentation.
D
C
Concept Challenger
Concept test against competitive brands
with market share forecasts.
Concept test, concept test research
Tools used to assess acceptance of a new
product or advertising campaign based on
a verbal description or picture, carried out
before a product test.
B
bass (Brand ASsessment System)
Example of an instrument relating to the
Integrated Intelligence approach. This
combines data from the consumer
panel ConsumerScan and from image and brand research in order to
monitor the psychological and monetary
value of a brand; data merging.
ConsumerScope
Mail panel, carrying out continuous
surveys of purchases of consumer goods
with slower-moving acquisition cycles and
the use of services; consumer panel.
Consumer panel
A sample of households which provide
regular information on their purchases;
ConsumerScope, ConsumerScan,
aTRACKtive, bass, electronic
diary.
ConsumerScan
Consumer panel in which the
purchasing behaviour of households and
individuals is recorded. Covers purchases
of nearly all fast moving consumer
goods. Households record their purchases
using an electronic diary; panel,
household panel, aTRACKtive,
bass.
Data merging
A statistical process whereby the features
of subjects in one sample are transferred
to those in another sample; Integrated
Intelligence, bass, move.
Data mining
Computer-aided data analysis used to
identify trends and correlations.
Data warehouse
Integrated system of databases used to
support business decisions, particularly in
marketing.
E
ecpo (Electronic Consumer Panel
Online)
Consumer Tracking technology used
to collect information on purchasing by
means of various electronic devices or
applications (Internet, personal digital
assistant, mobile phone).
Electronic diary
A hand-held piece of electronic equipment used to input data, which is then
downloaded by modem. Used by the
consumer panel, ConsumerScan.
encodex
A software platform for the business-tobusiness e-commerce transactions of
retail and industry in consumer durables.
153
F
Fast Track
A tracking system for the continuous
monitoring of promotional and advertising
recall, customer satisfaction and brand
image as perceived by consumers.
Market segmentation
Divison of an overall market into submarkets using different categories.
Segmentation can be by product type,
price classes, geographic split or
socio-economic lifestyle features and
value categories.
H
Household panel
A representative sample of households
which regularly report on their purchases;
Consumer Tracking, ConsumerScan,
panel.
HealthCare
Specialist area of market research for
pharmaceutical companies and healthcare
institutions operating in human, dental
and veterinary medicine. Set up in
mid-2003, HealthCare is the newest GfK
business division.
Media planning
Media planning involves decisions about
how best to allocate an advertising budget
in terms of advertising using various
media. The aim of all media planning is to
find the ideal solution for one or more
communication aims.
MediaWatch
An electronic metering device incorporated
into a wristwatch, used to measure usage
of various electronic and print media; Radiocontrol, reach research, media
research, portable people meter.
I
Image and brand research
Information gathering relating to the
image of a company or specific product or
service; bass.
Integrated communications
Term used to convey the idea of aligning
all corporate communications disciplines,
such as ci/cd, pr advertising, sales
promotions and sponsoring in order to
achieve synergetic effects and improve
efficiency.
Integrated Intelligence
Service segment which specializes in
integrating data from several sources
within and outside the GfK Group and
using it for complex consumer marketing
surveys covering several areas;
data merging, bass.
M
Mail panel
A postal survey of units of the same
sample which is repeated at regular
intervals; ConsumerScope.
Media research
Systematic, empirical research used as
a basis for media planning by media
companies and their advertising clients.
This form of research is the responsibility
of GfK’s Media business division;
reach, reach research,
Radiocontrol.
move
Name of a data merging project of GfK,
whereby the ConsumerScan panel
of GfK Panel Services and the tv panel
of agf/GfK Fernsehforschung are
merged. The aim is to provide the
advertising market with improved target
group differentiation and analyses of
advertising effectiveness monitoring.
N
Non-Food Tracking
Surveys of sales of consumer durables,
carried out at regular intervals. NonFood Tracking is one of GfK’s business
divisions; retail tracking, retail panel,
startrack.
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; tv panel, ConsumerScan,
ConsumerScope, household panel,
cf. tracking.
154
Point-of-purchase research,
point-of-sale research
Market research which focuses on the
actual location where products are sold.
Portable people meter
Metering devices which are used in
reach research and worn at all times.
A typical portable people meter is
Radiocontrol.
Product test, product test research
Concept test, concept test research.
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; Radiocontrol.
Ratings figures
The audience figures in terms of
households expressed as a percentage;
tv panel.
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.
Reach research
The continuous recording of media
usage; part of media research; reach,
portable people meter, Radiocontrol.
Retail panel
Regular recording of sales, product
categories and products via a
representative sample of retailers with
different retail types and sales channels;
Non-Food Tracking, retail tracking.
Glossaries
Retail research
Retail tracking.
Retail tracking
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; tracking, Non-Food
Tracking, retail panel.
S
startrack
SysTem to Analyse and Report on
TRACKing data. A host-free it platform
for the production and analysis of data
from the GfK Non-Food Tracking
division; data warehouse.
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,
Telecontrol xl.
tv panel
A representative sample of households,
selected using statistical methods, whose
tv viewing is continuously metered by
GfK Fernsehforschung and used as the
basis for audience share and ratings
figures; tv meter, reach, panel.
Share of noise
The level of advertising impact an
advertiser has to exert in order to draw
attention to a particular brand/ad in the
market.
Store test
Test carried out in selected, real stores
to make subsequent recommendations
for new products, product changes and
other measures such as placement,
promotion and price changes. The test
includes measuring unit sales.
T
Telecontrol xl
The latest generation of tv meters
produced by GfK subsidiary, Telecontrol.
Test market research
Systematic, empirical research of test
markets which is used as the basis for
marketing decisions, especially regarding
the marketing mix.
Test market forecast
Test market research.
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.
155
F I V E -Y E A R O V E R V I E W O F K E Y P E R F O R M A N C E I N D I C AT O R S F O R T H E G F K G R O U P
1999
2000
2001
eur million
Key indicators – balance sheet
Fixed assets
Change in % on previous year
Current assets
97.9
77.2
208.6
2001
2002
2003
Change
Pro
in
forma1)
%
eur million
+ 8.0
Fixed assets
–
263.8
285.0
29.6
– 21.2
170.1
–
26.5
8.0
177.2
190.4
189.8
–
189.8
200.9
91.2
7.4
– 0.3
–
– 0.1
5.9
–
+ 5.8
–
55.3
40.6
109.9
–
139.0
141.9
Investments
44.3
35.2
108.3
–
76.6
47.7
– 37.7
39.2
23.2
31.1
–
28.6
20.9
– 27.0
thereof in tangible
and intangibile assets
5.2
11.9
77.2
–
48.0
26.8
– 44.2
thereof in financial assets
143.8
132.7
163.1
–
181.5
204.1
+ 12.5
52.3
49.6
39.5
–
38.7
40.7
–
129.7
133.1
243.3
–
281.2
288.2
+ 2.5
Equity ratio
Borrowings
Gearing ratio
Asset structure in %
Investments
Equity ratio
Borrowings
47.1
49.7
58.9
–
59.9
57.4
–
275.2
267.6
413.1
–
469.6
502.0
+ 6.9
–
–
– 23.7
–
-39.6
– 24.9
– 37.2
Liquidity ratio I in%
152.6
136.9
62.6
–
52.4
59.0
–
Liquidity ratio II in%
234.4
257.5
127.5
–
122.4
137.6
–
Liquidity ratio III in%
245.2
268.0
131.1
–
125.2
140.1
–
Total assets
Net indebtedness
Key indicators –
income statement
Gearing ratio
Total assets
Net indebtedness
Key indicators –
income statement
Total performance (from 2001 sales)
380.4
469.0
482.1
505.8
559.4
595.3
+ 6.4
2)
82.4
89.4
84.8
84.8
86.0
89.8
+ 4.4
thereof Consumer Tracking2)
2)
100.9
112.9
119.5
122.2
137.3
166.7
+ 21.4
thereof Non-Food Tracking2)
47.9
53.6
56.5
62.6
61.3
58.3
– 4.9
thereof Media2)
128.4
183.5
199.6
214.5
224.5
220.8
– 1.6
thereof Ad Hoc Research2)
–
–
–
–
35.8
49.3
+ 37.7
thereof HealthCare2)
21.4
30.2
21.6
21.6
14.5
10.4
– 27.9
thereof Other2)
56.9
62.4
60.1
62.0
63.4
62.8
–
167.1
206.7
209.7
223.2
244.1
256.6
+ 5.1
43.9
44.1
43.5
44.1
43.6
43.1
–
Depreciation/amortization3)
20.5
16.6
37.0
28.2
24.9
24.8
– 0.4
ebitda
38.7
53.0
52.8
58.0
68.5
91.2
+ 33.0
10.2
11.3
10.9
11.5
12.2
15.3
thereof Consumer Tracking
thereof Non-Food Tracking
thereof Media2)
2)
thereof Ad Hoc Research
2)
thereof HealthCare
thereof Other2)
Proportion from outside
Germany in %
Personnel expenses
Personnel cost ratio in %
ebitda margin in %
participations
ebit margin in %4)
activity
Consolidated total income before
minority interests
Tax ratio in %
156
thereof in tangible
–
Current assets
–
Germany in %
Personnel expenses
ebitda
ebitda margin in %
15.0
36.4
15.8
29.8
43.6
66.4
+ 52.1
participations
3.2
3.0
3.7
2.9
6.4
3.1
– 51.3
18.2
39.4
19.5
32.7
50.0
69.5
+ 38.9
4.8
8.4
4.0
6.5
8.9
11.7
18.6
37.1
3.9
17.0
45.3
66.3
+ 46.4
activity
9.4
25.4
– 6.1
5.5
30.0
41.1
+ 36.9
minority interests
43.1
28.0
260.3
68.7
33.7
38.0
8.7
22.9
– 4.7
6.3
25.7
33.3
–
–
+ 29.8
ebit margin in %4)
Tax ratio in %
G f K G RO U P: F IV E -Y E A R - OV E RV I E W
1999
2000
2001
eur million
Fixed assets
Current assets
97.9
77.2
208.6
2001
2002
2003
Change
Pro
in
forma1)
%
eur million
+ 8.0
Fixed assets
–
263.8
285.0
29.6
– 21.2
170.1
–
26.5
8.0
177.2
190.4
189.8
–
189.8
200.9
91.2
7.4
– 0.3
–
– 0.1
5.9
–
+ 5.8
–
55.3
40.6
109.9
–
139.0
141.9
Investments
44.3
35.2
108.3
–
76.6
47.7
– 37.7
39.2
23.2
31.1
–
28.6
20.9
– 27.0
thereof in tangible
5.2
11.9
77.2
–
48.0
26.8
– 44.2
143.8
132.7
163.1
–
181.5
204.1
+ 12.5
52.3
49.6
39.5
–
38.7
40.7
–
129.7
133.1
243.3
–
281.2
288.2
+ 2.5
Equity ratio
Borrowings
Gearing ratio
Investments
Equity ratio
Borrowings
47.1
49.7
58.9
–
59.9
57.4
–
275.2
267.6
413.1
–
469.6
502.0
+ 6.9
–
–
– 23.7
–
-39.6
– 24.9
– 37.2
152.6
136.9
62.6
–
52.4
59.0
–
234.4
257.5
127.5
–
122.4
137.6
–
245.2
268.0
131.1
–
125.2
140.1
–
Total assets
Net indebtedness
Key indicators –
income statement
Gearing ratio
Total assets
Net indebtedness
Key indicators –
income statement
380.4
469.0
482.1
505.8
559.4
595.3
+ 6.4
2)
82.4
89.4
84.8
84.8
86.0
89.8
+ 4.4
thereof Consumer Tracking2)
2)
100.9
112.9
119.5
122.2
137.3
166.7
+ 21.4
thereof Non-Food Tracking2)
47.9
53.6
56.5
62.6
61.3
58.3
– 4.9
thereof Media2)
128.4
183.5
199.6
214.5
224.5
220.8
– 1.6
thereof Ad Hoc Research2)
–
–
–
–
35.8
49.3
+ 37.7
thereof HealthCare2)
21.4
30.2
21.6
21.6
14.5
10.4
– 27.9
thereof Other2)
56.9
62.4
60.1
62.0
63.4
62.8
–
167.1
206.7
209.7
223.2
244.1
256.6
+ 5.1
43.9
44.1
43.5
44.1
43.6
43.1
–
20.5
16.6
37.0
28.2
24.9
24.8
– 0.4
ebitda
38.7
53.0
52.8
58.0
68.5
91.2
+ 33.0
10.2
11.3
10.9
11.5
12.2
15.3
thereof Consumer Tracking
thereof Non-Food Tracking
thereof Media2)
2)
thereof Ad Hoc Research
2)
thereof HealthCare
thereof Other2)
Germany in %
Personnel expenses
ebitda margin in %
participations
ebit margin in %4)
activity
minority interests
Tax ratio in %
156
thereof in tangible
–
Current assets
–
Germany in %
Personnel expenses
ebitda
ebitda margin in %
15.0
36.4
15.8
29.8
43.6
66.4
+ 52.1
participations
3.2
3.0
3.7
2.9
6.4
3.1
– 51.3
18.2
39.4
19.5
32.7
50.0
69.5
+ 38.9
4.8
8.4
4.0
6.5
8.9
11.7
18.6
37.1
3.9
17.0
45.3
66.3
+ 46.4
activity
9.4
25.4
– 6.1
5.5
30.0
41.1
+ 36.9
minority interests
43.1
28.0
260.3
68.7
33.7
38.0
8.7
22.9
– 4.7
6.3
25.7
33.3
–
–
+ 29.8
ebit margin in %4)
Tax ratio in %
CONTENTS
P R O V I S I O N A L K E Y D AT E S I N T H E F I N A N C I A L C A L E N D A R
15 April 2004
15 April 2004
19 May 2004
15 June 2004
19 August 2004
18 November 2004
24 February 2005
31 March 2005
10 To our shareholders and business associates
31 March 2005
18 Corporate Governance
13 May 2005
26 Investor Relations
24 May 2005
12 August 2005
15 November 2005
Quarterly report as at 30 September 1)
TURNING MARKET OPPORTUNITIES
INTO SUCCESS
III Our Corporate Values
IV GfK Group – mission statement – our aims –
our strategies
1 Good financial year:
GfK Group in figures
2 Overview of the five business divisions
4 2003 at a glance
6 The Supervisory Board
7 Report by the Supervisory Board
14 The Management Board
21 GfK shares
28 GfK special
30 Sector: brands, advertising and
market research
C O N TA CT S
Public Affairs and Communications
Dr. Ulrike Schöneberg
Tel. +49 (0) 911 - 395 26 45
Fax +49 (0) 911 - 395 40 41
public.affairs@gfk.de
Investor Relations
Bernhard Wolf
Tel. +49 (0) 911 - 395 20 12
Fax +49 (0) 911 - 395 40 75
Publisher:
GfK ag
Nordwestring 101
90319 Nuremberg
http://www.gfk.de
VII
Editorial support services:
Medienservice Peter Reichard, Ebersberg
Design:
Scheufele Kommunikationsagentur GmbH,
Frankfurt/Main
Photography:
Annette Hornischer, Frankfurt
Lithography:
Mainteam, Aschaffenburg
Companies need to make decisions. Knowledge is the basis for decision-making.
Translation:
Our business information services provide the essential knowledge that industry, retail,
AGET Limited, London, UK
the service sector and the media need in order to make their decisions.
Printing:
Mediahaus Biering GmbH, Munich
The English language version is a translation
of the audited German Annual Report.
Printed on unchlorinated bleached paper
36 Consumer Tracking
GfK Group: Annual Report 2003
1) Publication is scheduled for before the start of the
trading session.
If you wish to order further copies
of the Annual Report or have any
queries, please contact:
G f K G RO U P: G ROW T H F RO M K N OW L E D G E
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 public.
44 Non-Food Tracking
52 Media
60 Ad Hoc Research
68 HealthCare
76 Innovative marketing research
MANAGEMENT REPORT AND FINANCIAL
S TAT E M E N T S F O R T H E G f K G R O U P
84 Management report
111 Financial statements
116 Notes to the consolidated financial statements
Annual Report 2003 GfK. Growth from Knowledge
148
Auditors’ report
150 Glossaries and short-form names
156/V Five-year overview
VI Index
VII Financial calendar
VII Contacts
II

GfK. Growth from Knowledge

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