GfK Management Report by liaoqinmei

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									Management report of the GfK Group
                                                  Management report of the GfK Group


1. The economy                                                                      Consumer climate in Germany: a rollercoaster ride 1)
1.1 Overall economic development: global recession                                                                                         Change               Change
                                                                                                                         Propensity           from Consumer       from
Growth in the global economy weakened considerably in 2008.                                                                 to buy2)      previous    climate  previous
Year-on-year, global gdp increased by 3.8% in 2008 compared to                      Month        Opinion trend                          month in % indicator month in %
                                                                                                                                                            3)


4.9% in 2007.                                                                       January      Consumer mood                  – 8.8           + 1.9            4.5           + 2.3
                                                                                                 wavering
The real estate crisis in the usa triggered severe turmoil in the                   February     Consumer cli-                 – 15.0           – 6.2            4.5           +/– 0
                                                                                                 mate – Spring not
financial markets. The industrialized nations in particular are
                                                                                                 yet in sight
reporting almost zero growth. However, economic development                         March        GfK revises                   – 10.2           + 4.8            4.6           + 2.2
in the three regions Central and Eastern Europe, Latin America                                   consumer expec-
                                                                                                 tation to 1 %
and Asia, especially China, positively influenced average growth
                                                                                    April        More consumer                  – 4.7           + 5.5            4.6           +/– 0
worldwide.                                                                                       confidence
                                                                                                 again
The following overview shows the development of the national                        May          Fears of inflation            – 20.4         – 15.7             5.0           + 8.7
economies in the regions and countries important to GfK’s                                        dampen consu-
                                                                                                 mer confidence
operations over the past three years as well as for 2009:
                                                                                    June         Falling consumer              – 23.7           – 3.3            4.3         – 14.0
                                                                                                 confidence curbs
                                                                                                 growth forecast
gdp growth 1)
                                                                                    July         Inflation keeps               – 26.2           – 2.5            3.4         – 20.9
In %                                    2006             2007    20082)   20093)                 sending consumer
                                                                                                 climate into fall
Germany                                 3.04)            2.54)    1.34)   – 2.54)
                                                                                    August       Poor prospects                – 27.9           – 1.7            1.8         – 47.1
France                                    2.2             2.1      0.8       0.1                 for the economy
uk                                        2.5             3.0      0.7     – 1.8                 continue to curb
Eurozone5)                                2.9             2.6      1.0     – 0.8                 consumer climate
eu 276)                                   3.2             2.9      1.3     – 0.3    Septem-      Despite current               – 12.8         + 15.1             1.5         – 16.7
                                                                                    ber          stabilization.
Russia                                    4.0             8.1      6.9       3.0
                                                                                                 no growth in con-
Central and Eastern Europe              6.74)             4.4      3.0       2.0                 sumption in 2008
usa                                       2.9             2.0      1.2     – 2.0    October      Consumer climate              – 18.2           – 5.4            1.7         + 13.3
Latin America                             5.0             4.5      4.0       3.0                 despite financial
China                                   10.8             11.9      9.4       6.5                 crisis
Japan                                     2.2             2.1      0.1     – 1.0    Novem-       Moderately                     – 6.7         + 11.5             1.9         + 11.8
                                                                                    ber          rising consumer
Asia and the Pacific4)                    7.6             7.2      6.2       6.4
                                                                                                 mood despite
World6)                                   5.0             4.9      3.8       1.9                 adverse economic
Sources:                                                                                         conditions
 1) diw “Principles of Economic Development 2009/2010”                              Decem-       Stable start to                – 6.3           + 0.4            2.1         + 10.5
 2) Estimate
                                                                                    ber          consumer climate
 3) Forecast for Economic Development 2008/2009
 4) International Monetary Fund (imf)                                                            into new year
 5) Excl. Slovak Republic                                                           1) These findings are from the comprehensive “GfK consumer climate maxx” survey con-
 6) The Euroframe Autumn Report 2008                                                   ducted since 1980 each month on behalf of the eu Commission. In the first half of the month
                                                                                       around 2,000 representatively selected people are asked about their perceptions of the
                                                                                       overall economic situation, their propensity to buy and their income expectations.
                                                                                    2) The consumer confidence or propensity to buy indicator is based on the following question
     Despite the economic downturn, germany recorded growth for                        to consumers: Do you think it is advisable to make purchases at the moment? (good time
                                                                                       – neither good time nor bad time – bad time).
     the fifth year in a row for 2008 as a whole. Although at 1.3% the              3) The consumer climate indicator describes private consumption. Key factors are income
                                                                                       expectations and buying propensity. The economic outlook has a more indirect effect on the
     increase in gdp declined again, there was a further recovery in                   consumer climate, generally as a result of income expectations.
     the labor market. The rate of unemployment dropped from 8.7%
     in 2007 to 7.5%. Nevertheless, the propensity to buy fell in the                  The economy in the eurozone remained on course for growth,
     first half of the year as a result of higher gasoline and heating oil             but here too there was a considerable slowdown in growth as
     prices as well as the increase in some food prices. The trend in                  exports were curbed by the downswing in the global economy and
     the propensity to buy was not positive again until the end of the                 a strong euro.
     year when energy costs fell and consumers had more disposable
     income.                                                                           The weak phase in the global economy also affected the eu
                                                                                       Member States in central and eastern europe, which export
                                                                                       a lot to countries in Western Europe. However, the catch-up
                                                                                       process in the new eu Member States was also checked by high
                                                                                       current account deficits and a real estate crisis in the Baltic
                                                                                       states.
  In the wake of the real estate crisis in summer 2007, private
                                                                       Sales and Growth by region
  households in the usa significantly restricted their spending
                                                                                                                                                                 Growth
  and corporate investment shrank. Moreover, export activities                                                        Sales                   Sales            2006/2007
  weakened, further curbing the economy.                               in usd million                                 2006                    2007                 in %1)
                                                                       Europe                                        10,662                 12,882                   3.2
  In contrast, the upswing in latin america continued. The trading      eu 15                                         9,566                 11,467                   2.4
                                                                        eu accession countries                          431                    565                   9.5
  links between countries, such as Mexico, with the usa led to a
                                                                        Rest of Europe                                  665                    850                  10.8
  slight reduction in the upward trend. However, declining exports     America                                       10,103                 10,823                  3.32)
  were countered by a robust culture of consumption and invest-         North America                                 8,890                  9,494                   3.6
                                                                        Latin America                                 1,213                  1,329                   1.3
  ment and the region is stable overall.
                                                                       Asia/Pacific                                   3,590                  4,064                   6.2
  As before, the People’s Republic of China is driving economic        Middle East/Africa                                381                       466              18.7
                                                                       Overall                                       24,737                 28,235                    3.9
  growth in asia. Unlike countries such as Japan, the Chinese
                                                                       1) Growth adjusted by inflation, based on sales in local unit of currency
  economy is also supported by strong domestic demand. The fall in     2) Own calculations
  exports to Western industrialized countries and Japan meant that     Source: esomar Industry Report 2008, published August 2008

  the Chinese economy reported only single-digit growth in 2008.
  Although growth in India even stagnated in the second quarter of     However, Asia is still the region driving global growth. Japan is
  2008, the country remains one of the fastest growing regions in      the undisputed leader at usd 1,518 million, followed by the
  the world.                                                           People’s Republic of China at usd 712 million and Australia at
                                                                       usd 623 million.

                                                                       Of the top 10 countries accounting for almost 78% of sector sales,
1.2 Market research sector: the upswing continues
                                                                       China’s market has the strongest sales growth.
The current data for 2007 from the Esomar “Global Market
Research 2008” industry report shows that the market research          Top 10 national consumer research markets:
sector demonstrated its dynamic upward trend again in that             sales, growth and share of the sector‘s overall sales
year. Sales were up year-on-year by 3.9%.                                                                                                                        Share of
                                                                                                                                              Growth           the sector
In principle, it is to be assumed that the demand for information                                                 Sales         Sales      2006/20071)              sales
on consumers and related interpretation and advisory services          in usd million                             2006          2007             in %          2007 in %
will remain strong in the future. However, in difficult economic       usa                                        8,232         8,726                    3.4         30.9
times, other issues, and therefore other areas of research, come       uk                                         2,369         2,771                    0.4          9.8
                                                                       Germany                                    2,206         2,659                    2.5          9.4
to the fore. For example, since the dramatic rise in commodity
                                                                       France                                     2,214         2,644                    2.3          9.4
prices, an increasing number of studies have been carried out in
                                                                       Japan                                      1,444         1,518                    5.2          5.4
the food sector to determine the optimum selling price. Market         Italy                                        706           858                    3.7          3.0
research enables clients to respond optimally to changes in market     Canada                                       658           768                    6.0          2.7
conditions.                                                            Spain                                        580           730                    6.4          2.6
                                                                       China                                        583           712                12.7             2.5
In addition, it is to be assumed that there will be an above-average   Australia                                    532           623                    0.5          2.2
increase in market research budgets in countries with a booming        Top 10 total                             19,524         22,009                     –          77.9
economy. For example, market research budgets have seen large          World                                    24,737         28,235                    3.9            –
increases in the regions Rest of Europe, eu accession countries and    1) Growth adjusted by inflation, based on sales in local unit of currency
                                                                       Source: esomar Industry Report 2008, published August 2008
Middle East/Africa.

With market research sales of usd 270 million, Russia is the
                                                                       Despite fast growth in market research in China, it should be noted
biggest and most important market in the Rest of Europe region
                                                                       that rate of expansion equates to one and a half percent of the us
and adjusted for inflation, budgets are up by 10.7%. The fastest
                                                                       market. The usa is the main sales market for the industry, followed
growth was again achieved in Turkey with 22.0%, whereby at
                                                                       by the uk, Germany and France. Together these account for around
usd 132 million, sales in the country are half those of Russia.
                                                                       60% of global market research sales.
Of the eu accession countries, Poland has the largest market
                                                                       From a global perspective, the growth drivers differ between the
research market with usd 209 million. Growth in the market
                                                                       developed regions in uncertain economic times and in emerging
amounted to 8.8%.
                                                                       countries, particularly China. While the need for explanations for
The most attractive market in the Middle East/Africa region is         consumer behavior and maintaining market position is becoming
South Africa, with sales of usd 208 million and growth of 25.2%.       increasingly important in Western industrialized nations where
                                                                       there is fierce competition, for producers in emerging countries,
                                                                       the spotlight is on developing new markets. In both cases, the
                                                                       information delivered by market research is often indispensible.
Economic and financial development: GfK Group




To meet these requirements better, there were more mergers                           The figures for income set out below refer to adjusted operating
and acquisitions again in 2007. As a result of this process of                       income. Like its competitors, the GfK Group uses adjusted
concentration, the top 10 market research companies now                              operating income as a key performance indicator. GfK is convinced
account for 55% of total sector sales. In its “Global Market                         that the explanations regarding business performance using
Research 2008” report, Esomar expects the process of con-                            the adjusted operating income will facilitate interpretation of the
solidation to continue among the 25 biggest market research                          GfK Group’s business development and enhance the informative
organizations and online market research providers.                                  value, in comparison with other major companies operating in
                                                                                     the market research sector. Where income is mentioned below,
With its global full service network, the GfK Group is a leading
                                                                                     this is the adjusted operating income. The margin is the ratio of
global market research organization. In 2007, the GfK Group
                                                                                     adjusted operating income to sales.
ranked fourth out of the top 10 companies in the market
research sector and also maintained this position in 2008.                           The adjusted operating income is calculated as follows:


Top 10 of the Consumer Research Sector                                               Reconciliation of adjusted operating income

                                                              Sales 2007   Growth                                                                20071)                Change
      Company                                                usd million    in %1)   In eur million                                  2007      adjusted        2008      in %
 1    The Nielsen Company, usa                                   4,220.0      12.7   Operating income                               136.4          125.6       128.9     + 2.6
 2    ims Health, usa                                            2,192.6       6.0   Expenses and income in
                                                                                     conjunction with restructuring
 3    Taylor Nelson Sofres, uk                                   2,137.2       5.4
                                                                                     and company transactions                          0.0               0.0     4.6        –
 4    GfK Group, Germany                                         1,593.2       5.8
                                                                                     Write-ups and write-downs of
 5    Kantar Group , uk
                      2)
                                                                 1,551.4       2.7
                                                                                     additional assets identified
 6    Ipsos, France                                              1,270.3       9.1   on acquisitions                                 30.1           30.1        24.1    – 19.9
 7    Synovate, uk                                                867.0        7.8   Personnel expenses for share-
 8    iri, usa                                                    702.0        5.6   based payments and long-term
 9    Westat, usa                                                 467.8       10.4   incentives                                        1.7               1.7   – 1.0        –
10    Arbitron, usa                                               352.1        6.9   Other operating income
1) Growth in national currency                                                       less remaining other operating
2) Estimate                                                                          expenses                                      – 10.6                0.2     2.1        –
Source: esomar Industry Report 2008, published August 2008                           Total highlighted items                         21.2           32.0        29.8     – 6.7
                                                                                     Adjusted operating income                      157.6          157.6       158.7     + 0.7
                                                                                     1) Excl. effects on income resulting from the settlement with ubm
2. Economic and financial development
2.1 Introduction
                                                                                     In the previous year, several figures in the income statement
The GfK Group prepares its consolidated financial statements in                      were influenced by the non-recurring effect from the settlement
accordance with the International Financial Reporting Standards                      agreed at the start of 2008 with the ubm, the vendor of the
(ifrs). The financial data for the sectors and regions originate                     nop World companies, as a result of which other operating
from the Management Information System.                                              income of eur 10.2 million was received. Other operating expenses
                                                                                     fell by eur 0.5 million, financial expenses by eur 2.1 million
For GfK, the order position is an important early indicator for the
                                                                                     and tax expenses rose by eur 0.3 million. The overall impact on
future development of the Group’s business. The development in
                                                                                     consolidated total income amounted to plus eur 12.5 million.
the assured volume of orders in relation to the expected annual
                                                                                     In the following analysis of the income statement for 2008, the
sales for the financial year is determined monthly. This ratio is a
                                                                                     previous year’s figures are shown net of the non-recurring effect
central management parameter for the Group and is monitored
                                                                                     to improve comparability.
by the management of GfK in a timely manner. In general, around
half the planned annual sales are already reported as assured                        Where statements herein refer to the number of employees, in
contracts in the first quarter.                                                      principle, this represents the total number of full-time posts.
                                                                                     For this purpose, part-time posts have been converted to equate
The picture varies from sector to sector. In Media, for example,
                                                                                     to full-time posts.
multi-year contracts were concluded for continual tv audience
research. In the panel-based Retail and Technology sector,                           The figures on the business development of the GfK Group and
contracts are largely renewed in the first three months of the                       any percentage changes are based on figures in 1,000 euros.
financial year. As a result of the lower proportion of continuous                    Accordingly, rounding differences may occur.
data collection in Custom Research and greater weighting for
                                                                                     The companies mentioned in the Management Report are referred
ad hoc studies, incoming orders in this sector tend to be more
                                                                                     to by their abbreviated names. The “Additional information” of the
evenly spread across the whole of the financial year.
                                                                                     Annual Report includes a list of the full names of all the companies
                                                                                     indicated.
2.2 GfK Group: successful income development                                              highlighted items include amortization, impairments and write-ups
                                                                                          on hidden reserves disclosed as part of purchase price allocation
Sales and income
                                                                                          amounting to eur 24.1 million (2007: eur 30.1 million). These relate
GfK increased its sales in 2008 by eur 58.4 million to eur 1,220.4                        to the balance of scheduled amortization and depreciation which
million. With organic growth of 5.5%, sales growth again out-                             was unchanged year-on-year at eur 14.8 million, impairments of
performed the industry.                                                                   eur 10.5 million (2007: eur 16.2 million) and value write-ups of
                                                                                          eur 1.2 million (2007: eur 0.9 million).
At eur 379.8 million, gross income from sales almost matched
the previous year’s level (2007: eur 380.7 million). The above                            The highlighted items include income and expenses relating
rise in sales is countered by a rise in the cost of sales of                              to reorganisation and business combinations which netted out at
eur 59.2 million to eur 840.6 million (2007: eur 781.4 million).                          eur –4.6 million. These include expenses amounting to eur
In contrast, selling and general administrative expenses                                  11.0 million, which were incurred from the planned amalgamation
declined. These amounted to eur 248.9 million in the financial                            with Taylor Nelson Sofres (tns), primarily including expenses
year 2008 compared to eur 252.0 million in the previous year.                             for consultancy services, as well as commitment fees for bank
Selling costs in 2007 included impairment losses on customer                              loans and other expenses. These were offset by income from the
relations amounting to eur 6.9 million. These declined in 2008                            break fee of eur 13.4 million. Furthermore, the item includes costs
to eur 1.1 million.                                                                       relating to the biss efficiency program of eur 5.8 million as well as
                                                                                          costs for the transformation changing the legal form of GfK Aktien-
income increased by eur 1.1 million from eur 157.6 million to
                                                                                          gesellschaft to GfK se amounting to eur 1.2 million.
eur 158.7 million. The operating margin was again high at
13.0%. In the previous year, the margin amounted to 13.6%.                                The highlighted items also include the remaining other operating
                                                                                          income and expenses. Netted out, these amount to eur –2.1 million
Development of earnings1)                                                                 (2007: adjusted eur –0.2 million). This item includes a gain
                                                                                          from exchange rate differences of eur 2.8 million (2007: eur 1.6
                                                             20072)             Change
In eur million                                    2007     adjusted     2008      in %    million).
Sales                                          1,162.1      1,162.1   1,220.4     + 5.0   operating income rose year-on-year by eur 3.3 million, or 2.6%,
Cost of sales                                  – 781.4      – 781.4   – 840.6     + 7.6
                                                                                          from an adjusted figure of eur 125.6 million to eur 128.9 million.
Gross income from sales                           380.7      380.7     379.8      – 0.2
Selling and general administrative                                                        The personnel cost ratio, which expresses the ratio of personnel
expenses                                       – 252.0      – 252.0   – 248.9     – 1.2
                                                                                          expenses to sales, stood at 40.5% (2007: 40.0%). In absolute
Other operating income                             25.8        15.6     54.3    + 247.9
                                                                                          terms, personnel expenses stood at eur 494.3 million (previous year:
Other operating expenses                         – 18.1      – 18.7    – 56.3   + 202.3
ebitda                                           199.1      188.4     192.0      + 1.9   eur 465.2 million).
as a percentage of sales                           17.1        16.2     15.7         –
                                                                                          Scheduled depreciation and amortization, especially on
Adjusted operating income                         157.6      157.6     158.7      + 0.7
as a percentage of sales                           13.6        13.6     13.0         –
                                                                                          software and office equipment, increased by 6.8% from
Highlighted items                                – 21.2      – 32.0    – 29.8     – 6.7   eur 44.2 million in the previous year to eur 47.2 million. There
Operating income                                  136.4      125.6     128.9      + 2.6   were also impairments of eur 13.2 million (2007: eur 16.4 million).
as a percentage of sales                           11.7        10.8     10.6         –    The balance of write-ups and depreciation was reduced by a
Income from participations                           3.0        3.0       3.9    + 28.2   reversal of impairment losses amounting to eur 1.2 million (2007:
ebit                                             139.4      128.6     132.8      + 3.2
                                                                                          eur 0.9 million).
as a percentage of sales                           12.0        11.1     10.9         –
Financial income                                     7.9        7.9     16.0    + 102.6   The GfK Group increased ebit by 3.2% compared to the adjusted
Financial expenses                               – 30.2      – 32.3    – 35.8    + 10.7   figure for the previous year from eur 128.7 million to eur 132.8
Net financial income                             – 22.3      – 24.4    – 19.8    – 19.0
                                                                                          million.
Income from ongoing business
activity                                          117.1      104.2     113.0      + 8.4
                                                                                          ebitda rose from the adjusted figure of eur 188.4 million in the
Tax on income from ongoing
business activity                                – 25.7      – 25.3    – 31.0    + 22.2   previous year by eur 3.6 million to eur 192.0 million in financial
Tax ratio in %                                     21.9        24.3      27.4         –   year 2008.
Consolidated total income                          91.4        78.9     82.0      + 4.0
Attributable to equity holders                                                            income from participations increased considerably
of the parent                                      83.2        70.7     73.2      + 3.5   from eur 3.0 million in the previous year to eur 3.9 million
Attributable to minority interests                  8.2         8.2      8.8      + 8.6   in 2008.
Consolidated total income                          91.4        78.9     82.0      + 4.0
Earnings per share (undiluted)                                                            net financial income, which is the balance of financial income
in eur                                             2.33        1.98     2.04      + 3.0   and expenses, amounted to eur –19.8 million in financial year 2008.
1) Rounding differences may occur
2) Excl. effects resulting from the settlement with ubm
                                                                                          This represents a considerable improvement on the previous year,
                                                                                          when adjusted other financial income would have stood at eur –24.4
                                                                                          million. Through active management and the targeted use of
Economic and financial development: GfK Group




derivative financial instruments, the income from currency hedging
                                                                                               Development of balance sheet growth
contracts rose significantly and made a material contribution to the
positive development.                                                                                                                                             Share
                                                                                                                                                                 of total
                                                                                                                                                       Change     assets
Overall, this led to a pleasing increase in the income from ongoing
                                                                                               In eur million            31.12. 2007     31.12. 2008     in %      in %
business activity of 8.4% from the adjusted figure of eur 104.2
million to eur 113.0 million in 2008.                                                          Assets
                                                                                               Non-current
At 27.4%, the income tax ratio was 3.1 percentage points above                                 assets                          1,088.3      1,085.0      – 0.3       75.0
the adjusted ratio for the previous year of 24.3%. In 2007, several                            Current
                                                                                               assets                           382.5         361.6      – 5.5       25.0
special effects led to a lower tax ratio.
                                                                                               Liabilities
The GfK Group: Income and consolidated total income 2004 – 2008                                Equity                           509.6         500.3      – 1.8       34.6
in eur million                                                                                 Non-current
                                                                                               liabilities                      458.2         448.5      – 2.1       31.0
                                                  + 82.9                                       Current
2004
                                    + 53.1                                                     liabilities                       503.0        497.8      – 1.0     34.4
                                                                     + 125.1                   Total assets                    1,470.8      1,446.6      – 1.6    100.0
2005
                                           + 67.5
                                                                                 + 150.5
2006                                                                                           The changes on the liabilities side stem from the decline in other
                                             + 71.2
                                                                                               non-current liabilities of eur 9.0 million, which mainly related to
                                                                                    + 157.6
20071)                                                                                         purchase price obligations for minority interests in China which
                                                + 78.9
                                                                                    + 158.7    have meanwhile been paid, as well as a fall in trade payables by
2008
                                                 + 82.0                                        eur 8.0 million.
  Income       Consolidated total income
1) Consolidated total income for 2007 adjusted by the special effect from the ubm settlement   In addition, equity fell by eur 9.3 million from eur 509.6 million
  amounting to eur 12.5 million                                                                in 2007 to eur 500.3 million. A rise in retained earnings of
                                                                                               eur 60.2 million was countered by a decline in earnings and
The GfK Group therefore increased its consolidated total income                                expenses recognized directly in equity of eur 74.3 million. The
by eur 3.1 million from the adjusted figure of eur 78.9 million in                             major portion of these items is attributable to currency fluctuations
the previous year to eur 82.0 million in 2008. This equates to a rise                          not affecting income, which in 2008 was mainly caused by the
of 4.0%.                                                                                       sharp fall in the value of the British pound (around eur – 43 million).

                                                                                               As of December 31, 2008 the equity ratio remained unchanged
Asset and capital position                                                                     on the previous year’s high level at 34.6%.
Compared with the previous year, the total assets of the GfK Group
decreased by eur 24.1 million to eur 1,446.6 million.                                          Development of equity ratio 2004 – 2008 in %

On the assets side of the balance sheet, the eur 3.3 million drop                              2004                                  45.6
in non-current assets was attributable to several effects:
goodwill fell by eur 9.2 million. Tangible assets increased by                                 2005                     28.6
eur 11.3 million, particularly through the expansion of digital
                                                                                               2006                      31.2
metering technology in tv research. Shares in associated
companies rose by eur 6.8 million primarily as a result of the
                                                                                               2007                        34.6
acquisition of a minority holding in DmrKynetec. This was
countered by deferred tax assets of eur 14.2 million.                                          2008                        34.6

The change in current assets of eur –20.9 million essentially
comprises a fall in trade receivables as well as other current assets
and deferred items. In addition, the assets held for sale in the
previous year amounting to eur 9.5 million no longer applied
in 2008.
Investment and finance                                                    Development of free cash flow

The GfK Group ensures that its investments are timely and                                                                                                     Change
suitably balanced in relation to business development. For                In eur million                                    31.12. 2007       31.12. 2008       in %

management purposes, the Group differentiates between ongoing             Cash flow from ongoing business
                                                                          activity                                                  168.1          145.8       – 13.3
investment, project investment and financial investment. The              Capital expenditure                                       – 49.2         – 50.5       + 2.5
investment activity in ongoing investment primarily covers new            Free cash flow before
and replacement purchases of tangible and intangible assets.              acquisitions, other investments
                                                                          and asset disposals                                       118.9            95.3      – 19.8
For an innovative market research company, investment in panel            Acquisitions                                              – 22.8         – 50.6     + 121.8
expansion and switching to digital recording devices, the expansion       Other financial investments                                – 1.6          – 0.3      – 78.2
                                                                          Asset disposals                                              3.4            1.1      – 67.8
and extension of production and evaluation systems as well as
                                                                          Free cash flow after
the development of new measurement technologies, is essential.            acquisitions, other investments
This project investment is generally reported to the management           and asset disposals                                         97.9           45.5      – 53.6
at regular intervals during the year as part of the management
information system. They make a decisive contribution to securing         net indebtedness, defined as the balance of cash, cash equiva-
the future success of the company through the expansion of its            lents and short-term securities less interest-bearing liabilities
leading edge in technology and raising the entry barriers for potential   and pension obligations, rose slightly by eur 8.6 million from
competitors. Overall, the range for ongoing and project investment        eur 472.9 million to eur 481.5 million. The main reason for this
regularly amounts to between 4% and 5% of sales. In addition,             rise was the increase in pension provisions.
the GfK Group regularly invests in the expansion of the international
network. Above a certain minimum level, this financial investment
                                                                          Development of net indebtedness
is subject to approval of the Supervisory Board.
                                                                                                                                                              Change
In 2008, GfK spent eur 101.5 million on investments (2007: eur 73.7       In eur million                              31.12. 2007            31.12. 2008        in %
million). Of this investment, eur 50.5 million (2007: eur 49.2 million)   Liquid funds                                        37.8                 36.7         – 2.9
related essentially to the procurement of software, office equipment      Short-term securities and
                                                                          time deposits                                         0.8                 0.9        + 11.8
and other tangible assets and eur 49.0 million (2007: eur 22.8 million)   Liquid funds and
to the acquisition of consolidated companies and other business           short-term securities                               38.6                 37.6         – 2.5
units.                                                                    Liabilities
                                                                          to banks                                           387.3                389.4         + 0.5
With cash flow from ongoing business activity of eur 145.8               Pension obligations                                 34.8                 41.5        + 19.4
million (previous year: eur 168.1 million), capital expenditure           Liabilities from
                                                                          finance lease                                       13.6                 14.3         + 5.3
was fully financed. After a sharp decline in working capital in the
                                                                          Other interest-bearing
previous year, the very low level at the start of 2008 could not be       liabilities                                         75.8                 73.9         – 2.5
maintained, resulting in a rise in working capital by eur 11.4 million    Interest-bearing
                                                                          liabilities                                        511.5                519.1         + 1.5
by the year-end.
                                                                          Net indebtedness                                 – 472.9              – 481.5         + 1.8
Taking account of expenses relating to capital expenditure amounting
to eur 50.5 million, free cash flow totaled eur 95.3 million              gearing, which is the ratio of net indebtedness to equity, rose
(2007: eur 118.9 million). Acquisitions in the financial year 2008        marginally in financial year 2008 to 96.2% (previous year: 92.8%).
were therefore fully financed.                                            The ratio of net indebtedness to the key financial ratios ebit, ebitda
                                                                          and free cash flow remained largely stable.


                                                                          Gearing and ratio of net indebtedness
                                                                          to ebit, ebitda and free cash flow

                                                                                                                                                    20071)
                                                                                                                                        2007      adjusted      2008
                                                                          Gearing (net indebtedness/equity)                           92.8 %        92.8 %    96.2 %
                                                                          Net indebtedness/ebit                                         3.39           3.67      3.63
                                                                          Net indebtedness/ebitda                                       2.38           2.51      2.51
                                                                          Net indebtedness/free cash flow                               3.98           3.98      5.05
                                                                          1) Excl. effects resulting from the settlement with ubm
Economic and financial development: GfK Group




2.3 Mandatory information under company law                            time the authorization comes into force. The new authorization
    (Section 315 para. 4 hgb, German Commercial Code)                 applies until November 20, 2009. The authorization to acquire
                                                                       own shares can be exercised by the company, or by third parties
By resolution of the Annual General Meeting on May 21, 2008,
                                                                       for the account of the company, in whole or in part, once or on
GfK se was created by changing the legal form of GfK Aktien-
                                                                       several occasions, to meet one or several purposes. The acquisition
gesellschaft (district court Nuremberg hrb 9398) (pursuant to
                                                                       takes place as the Management Board chooses through an offering
Section 2 para. 4 in conjunction with Section 37 se-vo, European
                                                                       addressed to all shareholders or by means of a public call to
company law). The share capital of GfK Aktiengesellschaft became
                                                                       issue such an offer or via the stock market. The shares acquired
the share capital of GfK se at the same level as at the date of
                                                                       by virtue of the authorization can be also be sold by means other
conversion and with the same denomination into no-par value
                                                                       than via the stock market or through an offering to all shareholders,
bearer shares as at that date.
                                                                       providing the cash price for the shares at the time of the sale is
The share capital of GfK se amounts to eur 150,296,541.94              not significantly below the stock exchange price for similar shares
divided into 35,947,363 no-par value bearer shares. There are          in the company. The number of shares for sale may not exceed a
no restrictions in the Articles of Association relating to voting      maximum of 10% of the share capital of the company at the time
rights or the assignment of shares. All shares carry the same          the resolution was passed by the Annual General Meeting on
rights.                                                                May 21, 2008 or – if lower – 10% of the registered capital of the
                                                                       company at the time of the sale of the shares. If the Management
GfK-Nürnberg e.V., Berlin, has a direct holding of 56.96% of the
                                                                       Board makes use of the authorization to call in its own shares in
voting rights in GfK se. The company has not received notification
                                                                       the company, this is carried out such that the share capital is
of any other shareholders with a stake of 10% or more of the
                                                                       reduced. In deviation from this, the Management Board can decide
capital.
                                                                       that the share capital will not change as a result of the call-in
Employees with an interest in the capital exercise their voting        and that the proportion of other shares in the share capital will
rights directly.                                                       increase as a result of the call-in pursuant to section 8 para. 3 of
                                                                       the German Stock Corporation Act. In this case, the Management
Pursuant to Article 5 of the Articles of Association of GfK se,
                                                                       Board is authorized to amend the number of shares in the Articles
the Supervisory Board is responsible for determining the number
                                                                       of Association. The authorization to use the shares acquired can
of members of the Management Board. The Supervisory Board
                                                                       be exercised once or on more occasions, separately or together,
appoints the members of the Management Board for a maximum
                                                                       for all or part of the volume of own shares acquired and with the
period of five years. Appointment for one term or several
                                                                       exception of calling in shares, can be carried out by third parties
reappointments for a maximum term of five years is permitted.
                                                                       for the account of the company. The subscription right of sharehol-
The Supervisory Board may appoint one member of the Manage-
                                                                       ders to own shares is excluded to the extent that the shares are
ment Board as the ceo and one or more as Deputy ceos. In
                                                                       being used as part of a merger of acquisition of companies, parts of
addition, the legal regulations on appointing and removing
                                                                       companies, participations or to discharge obligations under the
members of the Management Board (sections 84, 85 of the German
                                                                       convertible bonds and/or stock options to be issued in the future or
Stock Corporation Act, AktG) apply. The Articles of Association
                                                                       for disposal via the stock market or by other means.
do not contain any regulations that exceed the statutory require-
ments of sections 133, 179 of the German Stock Corporation             GfK se does not have any compensation agreements in the event of
Act (AktG).                                                            a takeover offer with the members of the Management Board and
                                                                       the employees.
The authorization to acquire own shares dated May 23, 2007 has
been rescinded for the period from the coming into force of the
following new authorization. By resolution of the Annual General       2.4 Sectors: spotlight on consumers and markets
Meeting on May 21, 2008, GfK se is authorized to acquire shares
                                                                       GfK offers its clients from the consumer goods and pharmaceuticals
in GfK se and to resell own shares held. The shares may be
                                                                       industry, retail, media and the service sector, a comprehensive
acquired in order to offer them to third parties as part of a merger
                                                                       range of information and consulting services in a total of three
of companies or acquisition of a company, part of a company or
                                                                       sectors. These deliver the fundamental knowledge which GfK clients
participation or to enable the company to discharge its obligations
                                                                       need to make their marketing decisions.
in relation to any convertible bonds and/or share options to be
issued by it or its Group companies in the future. The same applies    custom research: The Custom Research sector supplies information
for calling in shares and the resale of shares on the stock market.    and consulting services for operational and strategic marketing
Trading in own shares is not admissible. The repurchase of shares      decisions in over 30 countries, and via partnerships in more than
is limited to a maximum of 10% of the share capital in place at the    60 countries.
Custom Research offers a broad spectrum of services which include
                                                                       Proportion of sector sales to total sales in %1)
tests and studies, in particular, for product and pricing policy,
brand management, communications, distribution and customer
loyalty. GfK monitors products and services from development and
                                                                                       Custom Research                                 Retail and Technology
launch through maturity to the degeneration phase. The sector’s                                   64.1                                 24.9
portfolio comprises continually collected data, for example from
household and doctor panels, as well as ad hoc studies tailored
                                                                                                   Other                               Media
specifically to individual questions. The data source for the Custom
                                                                                                     0.3                               10.7
Research sector is provided by consumers and physicians (point
of consumer and physicians).                                           1) Rounding differences may occur

The Custom Research sector comprises the segments Consumer
Tracking, HealthCare, Automotive, Business and Technology,
                                                                       Proportion of sector income to total income in %1)
Financial Services, Consumer and Retail, Other Custom Research,
Custom Research Central and Eastern Europe, Custom Research
Latin America, Custom Research Asia and the Pacific as well as the                     Custom Research                                 Retail and Technology
multi-segment Custom Research.                                                                    35.3                                 52.0

                                                                                                  Media
retail and technology: Point of sale is the data source for the                                    15.0
Retail and Technology sector. The sector supplies clients with
information and consulting services based on retail data from
continuous surveys and analyses of sales of technical consumer
                                                                       1) Rounding differences may occur; “Other” – 2.3 % not taken into account on the chart
goods and services in the retail sector in more than 70 countries
worldwide. The services comprise regular surveys on the market
segments office communications, photographic technology and            Margin by sector in %
optics, electrical household appliances, information technology,
                                                                       Custom Research
telecommunications, sports equipment, tourism and consumer                                                                    8.6
electronics and entertainment media.                                                                                         7.2
                                                                       Retail and Technology
media: The Media Sector delivers information services on range,                                                                                    25.8
intensity and nature of media usage and acceptance in more than                                                                                     27.2
20 countries in Europe and the usa. The data source for the Media      Media
sector stems from the media (point of media).                                                                                               20.6
                                                                                                                                          18.3
The services are directed at clients from media companies,               Actual 2007        Actual 2008
agencies and the branded goods industry. The range of available
services includes continuous, as well as special one-off studies and
analyses. The data sources for the Media sector come from tv,          other: The sectors are supplemented by the Other division,
radio, print, outdoor advertising and online.                          which, in particular, covers GfK’s central services for its
                                                                       subsidiaries and other services not related to market research.
Breakdown of growth of sales and income in %1)                         The division mainly includes some elements of GfK Switzerland,
Total growth
                                                                       GfK Data Services, GfK Methoden- und Produktentwicklung
                                             + 5.0                     and departments of GfK Group Services.
                                         + 0.7
Growth from acquisitions
                                          + 2.5                        Economic development: successful rise in sales and income
                                          + 2.2
Organic growth                                                         In 2008, the GfK Group continued the successful business develop-
                                              + 5.5                    ment of the previous year and further increased sales and income.
                                         + 0.7
Currency effects
                                – 2.9
                                 – 2.1
  Sales       Income

1) Rounding differences may occur
Economic and financial development: sectors




custom research: Custom Research is the sector with the highest          units to counter this trend. These measures were completed by
sales in the GfK Group and more than half of the total sales are         the start of 2009 and will generate significant cost savings. The
generated here. Custom Research increased its sales slightly             decline in income is also attributable to the automotive segment.
in 2008 by 1.3% to eur 782.8 million. Of this, organic growth
                                                                         The global financial and economic crisis led to contracts not being
accounted for 2.4 percentage points, while acquisitions added
                                                                         renewed in the last quarter of the financial year and this was
2.6 percentage points. The development in business activities in
                                                                         partially offset by the two multi-year contracts signed in relation to
the regions Central and Eastern Europe, Latin America and
                                                                         Brand Monitor and Mystery Shopping activities in October in this
Asia and the Pacific was particularly pleasing. In addition, GfK
                                                                         segment.
improved its market position in Australia through the takeover
of the Blue Moon Group and in Turkey through the acquisition             The Custom Research sector achieved a margin of 7.2% in 2008
of Bilesim International. Currency effects reduced overall growth        compared to 8.6% in the previous year.
by 3.7 percentage points.
                                                                         retail and technology: The Retail and Technology sector
                                                                         ended financial year 2008 very successfully. It increased its sales
Custom Research: key figures1)                                           considerably by 16.6% to eur 304.1 million, thereby exceeding
                                                              Change     the eur 300 million mark for the first time. This corresponds to
In eur million                                2007    2008      in %     the highest percentage total growth in the GfK Group. Organic
Sales                                         773.0   782.8     + 1.3    growth improved year-on-year by 2.4 percentage points to
Income                                         66.2    56.1    – 15.3
                                                                         14.0 percentage points. The outstanding rise in sales was due
Margin in %                                     8.6     7.2    – 1.42)
                                                                         in part to the systematic expansion of the range of services and
Number of employees                           5,632   5,876     + 4.3
1) Rounding differences may occur
                                                                         the growing frequency of reports. The basis for this is the global
2) Percentage points                                                     production and reporting system, StarTrack. Moreover, the sector
                                                                         further expanded its network in financial year 2008, particularly
                                                                         in the regions Western Europe/Middle East/Africa as well as Asia
Custom Research: breakdown of growth of sales                            and the Pacific. Overall, acquisitions contributed 3.2 percentage
and income in %1)
                                                                         points to the growth in sales, while currency effects reduced
Total growth                                                             growth by 0.6 percentage points.
                                     + 1.3
              – 15.3
Growth from acquisitions                                                 Retail and Technology: key figures1)
                                      + 2.6
                                     + 1.7                                                                                                       Change
                                                                         In eur million                                2007               2008     in %
Organic growth
                                                                         Sales                                         260.8          304.1       + 16.6
                                     + 2.4
               – 15.0                                                    Income                                         67.3              82.6    + 22.8
Currency effects                                                         Margin in %                                    25.8              27.2    + 1.42)
                           – 3.7                                         Number of employees                           2,458          2,757       + 12.2
                             – 2.0                                       1) Rounding differences may occur
                                                                         2) Percentage points
  Sales       Income

1) Rounding differences may occur

                                                                         Retail and Technology: breakdown of growth of sales
                                                                         and income in %1)
The Custom Research sector generated operating income of
                                                                         Total growth
eur 56.1 million in 2008. Compared to the previous year, income
                                                                                                                          + 16.6
declined by 15.3%. Of this, minus 2.0 percentage points were                                                                    + 22.8
attributable to currency effects. Acquisition-related changes            Growth from acquisitions
contributed 1.7 percentage points to overall growth. A con-                                                    + 3.2
                                                                                                               + 3.4
siderable portion of the fall in income was due to the regional
                                                                         Organic growth
differences in the HealthCare business. While HealthCare
                                                                                                                        + 14.0
companies in Germany, Latin America and Asia and the Pacific                                                                     + 21.0
recorded pleasing growth rates, sales and income at the us               Currency effects
American and British companies slowed. The American pharma-                                            – 0.6
                                                                                                      – 1.7
ceuticals industry is fighting against a slump in sales caused
                                                                           Sales       Income
by generics, the time-consuming process for approval of new,
patented products as well as numerous inspections from both              1) Rounding differences may occur

political and regulatory aspects. Comprehensive restructuring
measures were implemented at the relevant HealthCare business
Retail and Technology also recorded the highest percentage                     At eur 23.8 million, income in the sector was below the previous
overall growth in income. There was a disproportionately high                  year’s figure of eur 25.7 million. Income in the financial year
increase in income of 22.8% to eur 82.6 million in this sector,                was adversely affected by investment in and costs for special
which has the highest income in the GfK Group. Organic growth                  production and evaluation software. Organic growth amounted
contributed excellent 21.0 percentage points to overall growth,                to minus 4.0 percentage points. Currency effects led to a fall in
while 3.4 percentage points were attributable to acquisition-related           income of 3.4 percentage points.
changes. In contrast, currency effects reduced growth by 1.7 per-
                                                                               The margin of 18.3 % is the second highest margin in the
centage points.
                                                                               GfK Group.
At 27.2%, the margin in Retail and Technology is considerably
                                                                               other: Sales in the Other division fell by eur 0.2 million to eur 3.5
higher than the previous year’s figure of 25.8%, and is again the
                                                                               million (previous year: eur 3.7 million).
highest margin of all the sectors.

media: Sales in the media sector amounted to eur 130.1 million                 Other: key figures1)
in 2008. This represents a significant rise of 4.5% on the previous
                                                                                                                                              Change
year. Developments in the regions North America and Central and                In eur million                           2007       2008         in %
Eastern Europe were particularly pleasing. The North American                  Sales                                     3.7         3.5         – 7.0
subsidiary gained additional market share through new products                 Income                                   – 1.5      – 3.7         N. A.
especially. Against the backdrop of the difficult market environ-              Number of employees                       421        465        + 10.5
ment, developments in this subsidiary were slower in the last                  1) Rounding differences may occur

quarter of 2008. In the Ukraine, GfK won a multi-year contract
in media usage. There were other successful contract renewals,                 As a result of higher personnel expenses and higher costs for
including in the uk with the renewal of the bbc Cross Media                    services and premises, the income shortfall in this division
contract and in Belgium for tv audience measurement and radio                  stood at eur 3.7 million in financial year 2008 (previous year:
audience measurement. Of the overall growth, 7.3 percentage                    eur – 1.5 million).
points were attributable to organic development. Currency effects
reduced income by 2.7 percentage points. There were no acquisition-
                                                                               2.5 Regions: global competence in local markets
related changes.

                                                                               The GfK Group operates a network consisting of its own
Media: key figures1)                                                           subsidiaries in over 100 countries. In geographic terms,
                                                                    Change     the business is divided into six regions:
In eur million                                      2007    2008      in %
Sales                                               124.5   130.1     + 4.5      germany – founded in 1934, GfK has been conducting research
Income                                               25.7    23.8     – 7.5      in its home market for 75 years. Since the 1960s, GfK has
Margin in %                                          20.6    18.3    – 2.32)     been extending its international network from its base in
Number of employees                                  559     594      + 6.3      Germany.
1) Rounding differences may occur
2) Percentage points                                                             western europe/middle east/africa – GfK has been active
                                                                                 in Western Europe since the 60s and covers 17 countries in total.
                                                                                 GfK is represented in 12 countries in the Middle East and in a
Media: breakdown of growth of sales
and income in %1)                                                                total of 13 countries in Africa.

Total growth                                                                     central and eastern europe – GfK established its first
                                        + 4.5                                    subsidiary here in 1989. Today, GfK has 27 companies covering
                       – 7.5
                                                                                 21 countries.
Growth from acquisitions
                                    + 0.0
                                                                                 north america – GfK first represented in the usa in 1999 with
                                    + 0.0
                                                                                 a subsidiary. In 2005, GfK also entered the market in Canada.
Organic growth
                                            + 7.3                                Three years later, in 2008, there are a total of 13 companies in
                           – 4.0                                                 the usa and Canada.
Currency effects
                            – 2.7                                                latin america – having started with its own company here in
                           – 3.4                                                 2002, GfK now has 12 companies in 20 countries.
  Sales       Income
                                                                                 asia and the pacific – this region joined the GfK network in
1) Rounding differences may occur
                                                                                 1985. In 2008, GfK had 27 companies in 16 countries.
Economic and financial development: regions




                                                                                       germany: As in previous years, the GfK Group was again the
Material changes in the GfK network
                                                                                       undisputed market leader in Germany in financial year 2008.
                       Invest-       Stake
                                                                                       In terms of sales, Germany was the second biggest region in 2008
                       ment          changes
Company                activity      in %      Sector                Region            with eur 316.1 million (previous year: eur 290.3 million). All of
Blue Moon Group        Acquisition from 0      Custom Research       Asia and          the sales growth was organic and GfK recorded a rise of 8.9% in
                                   to 100                            the Pacific       the financial year compared to 7.7% in 2007.
Bilesim                Acquisition from 0      Custom Research       Central- and
International                      to 100                            Eastern
                                                                     Europe            Germany: key figures1)
Societé V              Asset deal              Retail and            Western Europe/
                                               Technology            Middle East/                                                                               Change
                                                                     Africa            In eur million                                    2007           2008      in %
GfK Research           Share         from 66   Custom Research Western Europe/         Sales                                            290.3           316.1     + 8.9
Matters                increase      to 100                    Middle East/            Number of employees                              1,714           1,746     + 1.8
                                                               Africa
                                                                                       1) Rounding differences may occur
Shopping Brasil        Majority      from 0    Retail and            Latin
                       acquisition   to 51     Technology            America
Qosmos                 Minority      from 0    Retail and            Western Europe/
                       interest      to 7.81   Technology            Middle East/      Germany: breakdown of sales growth in %1)
                                                                     Africa
DmrKynetec             Minority      from 0    Custom Research Western Europe/         Total growth                                             + 8.9
                       interest      to 26                     Middle East/
                                                               Africa
                                                                                       Growth from acquisitions                       + 0.0
GfK Denmark            Share         from 87   Custom Research Western Europe/
                       increase      to 100                    Middle East/
                                                               Africa                  Organic growth                                           + 8,9
Chart Track            Share         from 9    Retail and            Western Europe/
                       increase      to 55     Technology            Middle East/      Currency effects                               + 0.0
                                                                     Africa
GfK ms Nigeria         Acquisition from 0      Retail and            Western Europe/   1) Rounding differences may occur
                                   to 100      Technology            Middle East/
                                                                     Africa
GfK Albania            Acquisition from 0      Custom Research       Central- and      western europe/middle east/africa: At eur 487.2 million, the
                                   to 100                            Eastern
                                                                     Europe            highest contribution to sales in 2008 came from the region Western
The Arbor Strategy     Acquisition from 0      Custom Research       North America     Europe/Middle East/Africa (previous year: eur 480.5 million) which
Group                              to 100                                              therefore generated around 40% of Group-wide sales. Organic
Market Insight         Majority    from 0      Custom Research       Western Europe/
                                                                                       growth in sales amounted to a good 3.9%, while currency effects
                       acquisition to 74                             Middle East/
                                                                     Africa            reduced sales by 4.1%. Acquisitions contributed 1.7 percentage
GfK mediacontrol       Majority    from 0      Retail and            Western Europe/   points to growth in sales.
Latina sl              acquisition to 53.5     Technology            Middle East/
                                                                     Africa
                                                                                       Western Europe/Middle East/Africa: key figures1)

Compared to the previous year, five of the six regions reported                                                                                                 Change
                                                                                       In eur million                                    2007           2008      in %
good organic growth in sales in financial year 2008. In the
                                                                                       Sales                                            480.5           487.2     + 1.4
emerging regions of Central and Eastern Europe, Latin America as
                                                                                       Number of employees                              3,341           3,526     + 5.5
well as Asia and the Pacific, in particular, the GfK Group recorded
                                                                                       1) Rounding differences may occur
dynamic double digit growth and further expanded its market
position.
                                                                                       Western Europe/Middle East/Africa: breakdown of sales growth in %1)
Regional breakdown of sales in %        1)
                                                                                       Total growth                           + 1.4

                      Germany                           Central and Eastern Europe     Growth from acquisitions               + 1.7
                          25.9                          7.1

 Western Europe/Middle East/                            North America                  Organic growth                           + 3.9
                      Africa                            18.0
                        39.9                                                           Currency effects               – 4.1
                                                        Asia and the Pacific
                 Latin America                          6.1
                                                                                       1) Rounding differences may occur
                           2.9

1) Rounding differences may occur
central and eastern europe: The GfK companies in the region                         latin america: Growth in the region Latin America was again
Central and Eastern Europe increased their sales contribution                       extraordinary dynamic in 2008. Compared to the previous year,
by 19.3% to eur 87.2 million (previous year: eur 73.1 million).                     the GfK Group increased its sales by an outstanding 32.7% to
Organic growth in sales improved by 1.6 percentage points from                      eur 35.5 million. With organic growth of 27.0 percentage points,
12.4% in the previous year to 14.0% in 2008. Currency effects                       this region reported the highest organic growth rate out of all the
led to a rise in sales of 1.0 percentage points, while acquisition-                 regions. Currency effects slightly reduced sales by 2.5%, while
related growth made a positive contribution of 4.4 percentage points.               acquisitions increased sales by 8.2%.


Central and Eastern Europe: key figures1)                                           Latin America: key figures1)

                                                                          Change                                                                                           Change
In eur million                                         2007       2008      in %    In eur million                                      2007              2008               in %
Sales                                                  73.1        87.2    + 19.3   Sales                                                26.7              35.5             + 32.7
Number of employees                                  1,284        1,495    + 16.4   Number of employees                                  403               525              + 30.3
1) Rounding differences may occur                                                   1) Rounding differences may occur




Central and Eastern Europe: breakdown of sales growth in %1)                        Latin America: breakdown of sales growth in %1)

Total growth                                                  + 19.3                Total growth                                                                       + 32.7


Growth from acquisitions                       + 4.4                                Growth from acquisitions                            + 8.2


Organic growth                                           + 14.0                     Organic growth                                                                + 27.0


Currency effects                            + 1.0                                   Currency effects                    – 2.5

1) Rounding differences may occur                                                   1) Rounding differences may occur




north america: As a result of the faster fall in the us dollar                      asia and the pacific: GfK achieved the highest relative growth in
against the euro which was still strong, growth in sales declined                   sales in the region Asia and the Pacific in financial year 2008, with
by 6.1 percentage points due to currency effects. This is the main                  a rise of 47.3%. Sales increased from eur 50.8 million in 2007 to
reason for the reduction in sales of 8.7% to eur 219.7 million                      eur 74.8 million. At 18.6 percentage points, the region reported
(previous year: eur 240.7 million). In organic terms, sales dropped                 the second highest organic growth rate in the GfK Group after Latin
by 3.1%, while acquisitions made a slight positive contribution to                  America. GfK achieved a rise in sales of 27.3% from acquisitions
sales of 0.5%.                                                                      and further expanded its market position in the region. Currency
                                                                                    effects contributed 1.4 percentage points to sales growth.
North America: key figures1)
                                                                                    Asia and the Pacific: key figures1)
                                                                          Change
In eur million                                         2007       2008      in %                                                                                           Change
Sales                                                240.7        219.7     – 8.7   In eur million                                      2007              2008               in %
Number of employees                                  1,092        1,039     – 4.9   Sales                                                50.8              74.8             + 47.3
1) Rounding differences may occur                                                   Number of employees                                 1,236            1,362              + 10.2
                                                                                    1) Rounding differences may occur


North America: breakdown of sales growth in %1)
                                                                                    Asia and the Pacific: breakdown of sales growth in %1)
Total growth                – 8.7
                                                                                    Total growth                                                                            + 47.3
Growth from acquisitions                     + 0.5
                                                                                    Growth from acquisitions                                             + 27.3
Organic growth                      – 3.1
                                                                                    Organic growth                                              + 18.6
Currency effects              – 6.1
                                                                                    Currency effects                            + 1.4
1) Rounding differences may occur
                                                                                    1) Rounding differences may occur
Research and development




3. Research and development                                               3.2 Custom Research

The development of innovative methods and systematic further              GfK Custom Research North America developed an innovative
development of established research instruments is of central             software solution known as gfk smart (Superior Mystery
importance to the GfK Group in order to intensify existing customer       Shopping Administration and Reporting Technology) that
relationships and attract new customers. For this reason, the             improves the research process for complex mystery shopping
continual development of innovative methods and instruments               projects. It also enhances the speed and quality of interpretations.
constitutes an important part of day-to-day business operations.          The GfK Mystery Shopping test method is used, for example, to
Most of the necessary development work is carried out by GfK              analyze the service quality provided by supermarkets, restaurants,
Methoden- und Produktentwicklung in Nuremberg. The 22-strong              insurance companies and banks and to determine measures to
team focuses on questions relating to statistics and methods,             optimize service quality.
defining populations, optimizing random samples and extrapolation
                                                                          An innovation at GfK subsidiary GfK Strategic Innovation is the
procedures as well as program concepts for data collection and
                                                                          GfK NewProductWorks® (npw) database. This is the world’s
analysis software. In addition, the individual sectors and subsidiaries
                                                                          largest data collection covering all the product innovations
– sometimes in cooperation with clients, universities and manage-
                                                                          successfully launched in the market in the last 25 years. The
ment consultants – also carry out projects on a decentralized basis,
                                                                          database catalogues product and brand positioning, core
especially those which serve to establish new information services
                                                                          statements and slogans. It enables links to be established between
in consumer goods markets, countries or regions. GfK worked on
                                                                          developments within individual categories and sectors as well
the following research and development projects in 2008.
                                                                          as across the categories and sectors. Based on the theory that
                                                                          successful innovations emerge and evolve from concepts that
3.1 GfK Methoden- und Produktentwicklung                                  are already accepted by consumers, GfK is able to make forecasts
                                                                          regarding the future development of certain products and
In cooperation with the Marketing faculty at the University of
                                                                          categories.
Saarbrücken, GfK Methoden- und Produktentwicklung developed
the GfK EmoSensor for the Custom Research sector. This instru-            Together with a Milan-based electronics manufacturer, Italian
ment can record the emotions triggered in consumers by marketing          subsidiary GfK Eurisko developed GfK dialogatore. This device
measures such as tv spots or new products on a differentiated basis.      looks like an organizer and has a touch screen, microphone,
                                                                          speakers, a camera, sound matching options and a gps system.
The hierarchical bayes method was used to estimate price
                                                                          It is suitable for all types of questions in a panel and panel
elasticities for data from the household panel for the first time in
                                                                          members can use the GfK Dialogatore to scan in the bar codes
2008. This method can be used to determine the price elasticities
                                                                          of products, newspapers and magazines. Through the sound
for a brand, even when the data available is actually insufficient.
                                                                          matching options, the device can also be used for interviewing
To make up for the deficit, data from other brands is used in order to
                                                                          tv- and radio audiences. The device is fitted with a gprs modem
obtain an optimum assessment that takes account of all information.
                                                                          so the data can be transferred continually by telephone to a
This provides clients with stable results, even when the data situation
                                                                          central computer for analysis and reporting.
is not ideal.
                                                                          The GfK target group profiler (tgp) identifies core groups for
In the field of conjoint analysis, GfK used the genetic algorithm for
                                                                          marketing, that is households or persons with the highest
product optimization with the hilca (Hierarchical Individual Limit
                                                                          potential for a particular brand. The focus is on people who so far
Conjoint) software for the first time. hilca is aimed at optimizing
                                                                          have rarely or never bought the brand but display a high level of
products that can be described by a large number of properties.
                                                                          the characteristics that define the group of regular buyers. These
Computerized run-throughs of all possibilities in full usually fail
                                                                          represent groups that can be brought closer to the brand with
because of the huge number of possible combinations. Here, the
                                                                          targeted marketing. The tgp analyzes circumstances, lifestyles,
genetic algorithm helps deliver a speedy, targeted and virtually
                                                                          and consumer preferences in products, stylization and food for
optimum result.
                                                                          this target group. Individual marketing measures are derived from
                                                                          the results.

                                                                          How will a planned price increase affect individual target groups?
                                                                          GfK price performance planner (ppp) was developed to carry
                                                                          out this type of simulation. The impact on unit sales and sales
                                                                          revenue resulting from a change in price is determined on the
                                                                          basis of a market model. The modeling includes all brands in
                                                                          the relevant competitive environment as well as purchases in
                                                                          discount stores. The relevant brands and stores where they are
                                                                          purchased per household are known. Information is also available
                                                                          as to which brands are offered in what stores at what price. The
instrument also takes the loyalty of households to individual        Using t.o.m. fmcg tv (target optimizer for markets), data from
brands and stores into account. If the price of a brand in a         the GfK ConsumerScan panel is transferred into the agf/GfK tv
store increases and this exceeds the consumer’s price threshold,     panel. Information about viewers not available from the tv panel
the consumer has the option of buying the brand in a different       data alone is made transparent through data fusion. The same
store where it is cheaper or choosing an alternative brand in        principle is applied in t.o.m. pharma tv, only here the data is
the same store. The third option is to delay the purchase for a      transferred from the GfK HealthCare panel. This can show
certain amount of time and wait until the item is on special         which viewers occasionally buy a particular headache remedy,
offer. This facilitates the simulation of complex scenarios which    for example. tdw t.o.m. pharma can be used to record responses
simultaneously take into account the price, frequency of             to print advertising, whereby information on purchasing supplied
promotions, distribution, advertising, time and competitors’         by the HealthCare panel is transferred into the Typology of Wishes
response factors.                                                    (TdW), one of the leading market media studies. The TdW method
                                                                     is particularly suitable for this project, as it maps both general
GfK segment tracker is used to identify the needs and motives
                                                                     interest and pharmacy customer magazines. This instrument
of people in the medical field with regard to their preferences in
                                                                     enables pharmaceutical companies to place advertising on a more
terms of sales promotions. The instrument was developed by the
                                                                     targeted basis, while publishing companies can also use it to
us subsidiary GfK Market Measures in 2008. It helps clients in
                                                                     improve the positioning of their titles on the basis of buyer data.
the pharmaceuticals industry target their customers correctly
                                                                     Combining this with t.o.m. Pharma tv also facilitates optimized
so that they can meet the various needs and requirements of
                                                                     cross-medial planning. The Internet is covered by web.consumer.
doctors. GfK Segment Tracker splits doctors into six different
                                                                     Here GfK uses data fusion to transfer buyer target groups from the
groups according to how they evaluate various advertising
                                                                     GfK ConsumerScan panel into the United Internet Media (uim)
contacts or how they define the perception of their profession.
                                                                     customer database. This can be used to determine whether a certain
This segmentation can assist pharmaceutical companies in
                                                                     consumer group looks at a particular Internet page especially
making more effective marketing decisions. Marketing depart-
                                                                     frequently, so that companies can optimize the placement of their
ments can tailor content more specifically and better address
                                                                     advertising accordingly.
the needs of the different doctors. Optimum use can be made
of budgets, while maximizing doctor satisfaction and receipts
and enhancing the advertising impact.                                4. Human Resources
                                                                     The sustained internationalization of the GfK Group is accompanied
3.3 Retail and Technology                                            by the increasing internationalization of its personnel activities.

mobile content tracking and downloads was developed                 The Human Resources International department, which is responsible
by the Retail and Technology sector, attracting a high level of      for implementing the global Human Resources strategy and provides
awareness among the mobile phone and provider industry in 2008.      support to the operating units when introducing hr instruments,
Millions of mobile phone users download highly diverse mobile        was strengthened in 2008. The service offering was extended and
content onto their phones and this opens up increased advertising    cooperation increasingly expanded through the introduction of
opportunities for companies. The research method is based on         international project teams. The resultant processes for the
deep-packet inspection technology (dpi), which collects exact,       introduction or optimization of hr will be presented to the local
standardized and detailed measurements for the three main            GfK companies at the annual Human Resources Conference before
sources of mobile content: Internet-based tv, computers and          they are rolled out in the Group.
mobile phones. For GfK, dpi technology quite simply represents
the audience measurement that clients need for commercial
                                                                     4.1 Scorecard and Best Practice award
success on the world wide web.
                                                                     The Human Resources scorecard was introduced in 2008 and
                                                                     is used to regularly measure the implementation of the global
3.4 Media
                                                                     hr strategy using key performance indicators (kpis) such as staff
Markets and the media have changed considerably in the past few      turnover, the length of the recruitment process, the number and
years with pressure from competition in the markets intensifying,    quality of applications, the quota of key positions filled internally
target groups becoming increasingly fragmented, consumers            and the number of management successors. This provides
becoming less transparent and media budgets spread across a          important information on the status of hr activities at regional
growing number of media. Media planning that is based purely         and global level. The findings are incorporated in the long-term
on socio-demographic features such as age, sex or income is no       planning and indicate which instruments are proving effective.
longer enough and additional information about consumers is
                                                                     In addition, the scorecard opens up the possibility of comparing the
required to reach them effectively and efficiently. To obtain this
                                                                     kpis, not just within the GfK Group but also externally, for example
information, market researchers transfer features from one data
                                                                     with other companies in the home market, and of setting targets for
source to another. Using this method, the Research, Consulting &
                                                                     hr activities.
Development department at GfK Fernsehforschung in Germany has
developed four new instruments for the market:
Human Resources




The Best Practice Award was introduced in 2008 with regard to
                                                                        Number of employees by sector in %1)
the communication and dissemination of effective personnel
instruments and processes. Representatives of a large number
of GfK companies select from the many candidates presenting                           Custom Research                Retail and Technology
                                                                                                 60.6                28.5
their instruments to a group of hr representatives from all over
the world. These are the best instruments in the recruit, refresh
and retain categories. The candidates and the winners will be
presented and receive their awards at the annual international                                    Other              Media
                                                                                                    4.8              6.1
hr Conference.
                                                                        Total 100%  9,692 full-time positions

4.2 Global employee survey                                              1) Rounding differences may occur


GfK’s success depends to a great extent on the commitment of its
employees at all levels. In the light of this, the GfK Group carried    Number of employees by region in %1)
out its first global “Employee Engagement Survey” in 2008. The
response rate was very good at 77%.                                                           Germany                Central and Eastern Europe
                                                                                                  18.0               15.4
The Management Board and management are looking very closely
at the results of the global employee survey and what they mean.         Western Europe/Middle East/                 North America
                                                                                              Africa                 10.7
In a process managed by hr International, the results of the                                    36.4
                                                                                                                     Asia and the Pacific
Employee Engagement Index will be discussed with the employees
                                                                                         Latin America               14.1
from a global as well as regional and local perspective and                                        5.4
measures derived to enhance engagement.
                                                                        Total 100%  9,692 full-time positions
From now on, the Employee Engagement Index will be determined           1) Rounding differences may occur
every year and forms a core part of hr’s activities.

                                                                        4.4 Staff turnover: continues to vary sharply from region to
4.3 Employees
                                                                            region
The number of employees in the GfK Group rose in financial year
                                                                        The staff turnover rate at the GfK Group is the ratio of employee
2008 by 622, or 6.9%, to 9,692 as of December 31, 2008.
                                                                        resignations in relation to the average number of employees
With a total staff complement of 7,946, the number of employees         in the Group in the financial year. In 2008, this indicator rose by
at GfK companies abroad increased by 590 compared to 2007. In           0.5 percentage points to 13.5% (previous year: 13.0%).
total, 82% of GfK employees work outside Germany, continuing
                                                                        At 3.5% (previous year: 2.2%), the rate in Germany had increased
the trend towards internationalization of the workforce.
                                                                        slightly, but was still the lowest rate of all GfK regions. Outside
In regional terms, around half of the total rise in personnel was       Germany, staff turnover varied sharply from region to region.
attributable to Central and Eastern Europe and Latin America.           Compared to the previous year, employee retention improved
The region Asia and the Pacific also saw the number of employees        significantly in Latin America and the staff turnover rate fell by
rise, but at 20% the region‘s share of the total personnel increase     7 percentage points to 13.4%. In the dynamic market environment
was lower than in previous years. As a result of adjustment measures,   in the growth regions in Asia and the Pacific as well as Central and
North America was the only region in the GfK Group to record a          Eastern Europe, at over 20% the rates were similar to those in the
decline in the number of employees.                                     previous year and again considerably higher than in the other
                                                                        regions.
The number of employees increased in all sectors of the GfK
Group. At 48%, most of the rise was attributable to the Retail
and Technology sector, followed by Custom Research at 39%.              4.5 Total remuneration and shares of the Management Board
While the increase in the Custom Research sector stemmed                    and Supervisory Board
from the acquisition of new companies, in Retail and Technology,
                                                                        Information on the remuneration of the Management and
the Group’s presence increased organically in Central and Eastern
                                                                        Supervisory Boards and their shareholdings is given in the tables
Europe as well as Asia and the Pacific. Moreover, personnel
                                                                        and explanations in the remuneration report in the Corporate
numbers increased in the growth region of Latin America, partly
                                                                        Governance report on page 15ff.
as a result of the acquisition of a company in Brazil.
                                                                        There were no loans or advances to members of the Management
                                                                        and Supervisory Boards.
5. Organization and administration                                     Business Insights, Best Practice as well as Projects & it. Financial
                                                                       Accounting and Operational Accounting in Financial Services
The range of products and services offered by the GfK Group
                                                                       and the Central Services department provide services for most of
comprises information services based on market research
                                                                       the companies in Germany. Outside Germany, the individual
data. The Group has faced the challenges posed by increasing
                                                                       GfK companies are largely responsible for these services them-
globalization and has put in place an organizational structure
                                                                       selves.
that enables the local GfK companies to respond quickly and
efficiently to opportunities in the market. This also applies to the
head office department, GfK Group Services. GfK se functions           6. Purchasing
as both the holding company and an operating unit. In Germany,
                                                                       Purchasing traditional capital goods is of minor importance for
the GfK Group’s network encompasses the parent company as well
                                                                       market research activities. In Germany, this purchasing is carried
as ten consolidated, 19 associated companies and three minority
                                                                       out on a centralized basis by Central Services which is part of
interests. Worldwide there are 136 consolidated subsidiaries active
                                                                       GfK Group Services, as well as by it Services which is part of
in over 100 countries. The Group is based in Nuremberg.
                                                                       GfK Data Services. This applies in particular for the purchase of
                                                                       work materials and standard office equipment.
5.1 Management Board, sectors and segments: new structure
                                                                       it Services carries out centralized purchasing relating to standard
The GfK Group was run by a Management Board consisting of six          software, hardware infrastructure and telecommunications for the
members in 2008. The Chief Executive Officer (ceo), Professor          German companies. With the support of the Chief Information
Dr. Klaus L. Wübbenhorst, is responsible for the strategy of the       Officer (cio), it Services also concludes Group-wide agreements
GfK Group, the executive personnel development strategy, the           and services enabling all companies in the GfK Group to purchase
it strategy, contact with the executive bodies and participations      it goods and services at favorable terms and conditions. The cost
of a non-operational nature as well as research and development        budget for hardware, software and telecommunication services for
and Corporate Communications. The Chief Financial Officer (cfo),       the whole Group amounted to around eur 60 million worldwide, of
Christian Weller von Ahlefeld, is responsible for the Financial        which around eur 18 million was attributable to software.
Services, Human Resources and Central Services departments.

At the start of 2008, the five business divisions Custom Research,     7. Environmental protection
Retail and Technology, Consumer Tracking, Media and HealthCare
                                                                       The careful and responsible use of natural resources is important
were restructured to form the three sectors: Custom Research,
                                                                       to the GfK Group. Through directives and recommendations,
Retail and Technology and Media. This structure is based on the
                                                                       all employees are urged to optimize consumption and observe
assessment of market research services, which are essentially
                                                                       the principles of recyclability when carrying out their business
based on data that stems from a variety of sources. In the Manage-
                                                                       activities, especially with regard to the use of consumables.
ment Information System, the sectors are further broken down into
                                                                       Central Services and it Services at GfK are responsible for the
segments.
                                                                       purchase and appropriate disposal of materials in Germany.
The Custom Research sector is led by the three Management Board        Outside Germany, the individual GfK companies are responsible
members Petra Heinlein, Debra A. Pruent and Wilhelm R. Wessels.        for these themselves.
Within the sector, Petra Heinlein is responsible for the segments
Financial Services, Consumer and Retail, Other Custom Research,
                                                                       8. Corporate Communications and marketing
Custom Research Central and Eastern Europe, Custom Research
Latin America, Custom Research Asia and the Pacific as well as         Corporate Communications is responsible Group-wide for internal
Multi-Segment Custom Research. Debra A. Pruent is responsible          and external communications for the GfK Group and comprises
for the segments Automotive and Business and Technology, while         the three departments Public Relations, Corporate Design/Corporate
Wilhelm R. Wessels heads up the segments Consumer Tracking             Identity and Investor Relations. The target groups include
and HealthCare.                                                        representatives from the media, the general public, employees,
                                                                       shareholders, investors and financial analysts. The Investor
The Retail and Technology sector is managed by Dr. Gérard
                                                                       Relations department and its duties are outlined separately in the
Hermet and the Media sector by Wilhelm R. Wessels.
                                                                       section “GfK shares” in the image section of this Annual Report.

                                                                       To effectively supply this extensive corporate network and the
5.2 Administration: centralized approach for global services
                                                                       general public throughout the world with information, the
In Group Services in the GfK Group, the Financial Services, Human      Corporate Communications department at head office made
Resources, Central Services and Corporate Communications               greater use of innovative, digital technologies in 2008. This
departments fulfil centralized functions throughout the Group.         included more webcasts, digital newsletters, rss (Rich Site
The Financial Services department includes Legal Services and          Summary) feeds on the internet and the relaunch of the global
Transactions, Group Reporting, Group Taxes, Group Treasury,            online database.
Opportunity and risk position




8.1 Corporate Communications: providing information using                 9. Opportunity and risk position
    new and existing services
                                                                          The early identification, evaluation and professional management
In the reporting year, GfK se published a total of 76 press releases      of risks represent the basis for GfK for leveraging the opportunities
in Germany, around 15% more than in 2007. The coverage in the             in the market research market in a responsible manner.
print media comprised around 15,000 articles, an increase of 25%
                                                                          Risk and opportunity management in the GfK Group is continually
compared to the previous year.
                                                                          reviewed and further developed. In 2008 for example, more improve-
Since the rss feed function was set up on the GfK Group’s website         ments were made to systematic risk quantification. As in previous
in May 2008, interested parties have been able to automatically           years, the Group’s external and internal auditors confirmed the
subscribe to new content posted in the Press section of the               effectiveness of GfK’s early opportunity and risk identification
website. By the end of 2008, this function was being used by              system.
102,000 contacts.

GfK’s website recorded 6.6 million page views, around 15% more            9.1 Principles of opportunity and risk management:
than in 2007. The Corporate Communications department processed               integrated system
4,000 e-mail enquiries.
                                                                          principles of risk management: To safeguard the continued
In December 2008, the company picture database, GfK Image-                success of the GfK Group in the market, the GfK Group must
world, was relaunched, offering all employees worldwide access            consistently exploit opportunities as they arise. However, no
to a pool of over 6,600 images for print media, presentations or          opportunity is without risk. To ensure the professional manage-
brochures.                                                                ment of risks and guarantee the identification of resulting
                                                                          opportunities, risk policy principles were drawn up which form
                                                                          the basis for the entire opportunity and risk management system
8.2 Marketing: sharpening the brand image
                                                                          of the GfK Group. The key tenets of the system are:
Most of the marketing activities of the subsidiaries in the GfK Group
                                                                            Only those risks which are known can be managed.
are carried out independently, but in close consultation with Corporate
Communications.                                                             Risks must be systematically assessed.

Trade fairs and conferences play a key role as marketing instru-            Risk management is a duty for everyone.
ments. GfK either organized or participated in a total of 185 events.
                                                                          These principles are integral to the structures and business
In addition, the GfK Group appeared at the main market research
                                                                          processes of the GfK Group.
trade fairs: at the end of March as the silver sponsor at the arf
(Advertising Research Foundation) Annual Convention (Re: think            responsibilities and functions:
2008) in New York, usa, as one of the main sponsors at the Esomar
                                                                          Risk Management Coordinators
annual congress in Montréal, Canada in September and at the
                                                                          The direct responsibility for early identification, management
German market research trade fair Research & Results in Munich
                                                                          and communication of risks locally lies with the business manage-
in November.
                                                                          ment of the individual GfK companies. Local Risk Management
At the end of 2008, as a further Group-wide marketing measure in          Coordinators promote risk awareness and ensure that the prescribed
addition to the existing image campaign, Corporate Communications         central principles are implemented by the respective organizations.
developed a new corporate design concept for advertisements,
                                                                          Risk Management Committee
which should further harmonize and enhance the brand identity of
                                                                          The Management Board has established a Risk Management
GfK at international level.
                                                                          Committee under the terms of its overall responsibility for
                                                                          the opportunity and risk management system whose standing
                                                                          members include the cfo as Chairman, the Global Head of
                                                                          Corporate Finance as well as an employee from the Business
                                                                          Insights department responsible for risk management. The
                                                                          Committee is charged with the continuous development and
                                                                          updating of rules for Group-wide efficient and functional
                                                                          opportunity and risk management. Beyond this, the Committee
                                                                          remit also extends to identifying relevant risks and notifying the
                                                                          Management and Supervisory Boards of the current risk position
                                                                          within the Group.
Whistleblowing: taking the initiative                                      Comprehensive guidelines also form part of the internal controlling
GfK encourages all its staff to report any actual or suspected             process in which all mandatory approval processes and authorization
infringements of any statutory or internal regulations. Staff              mandates are specified. Internal Audit checks the structure and
members can contact their superiors, the Risk Management                   functionality of the opportunity and risk management system at
Coordinators, Internal Audit or Human Resources. If employees              regular intervals. The subject of opportunity and risk management
do not wish to use these channels, they can also make an                   is also enshrined in all the audits carried out at subsidiary com-
anonymous report under the terms of the whistleblowing                     panies and the insights from these audits and recommendations
regulations.                                                               made by the auditors in turn serve to further improve the system
                                                                           for early identification of risks and opportunities.
processes: In order to take full account of the opportunities and
risks, the GfK Group applies an integrated opportunity and risk
management strategy. This involves identifying and managing                Elements of the opportunity and risk management system

the strategic and operating risks and arising opportunities at the
                                                                                                   Reporting system
level of the various GfK companies, GfK regions, GfK sectors and
Group level.


GfK Group: integrated opportunity and risk management system
                                                                                                      Risk manage-
                                                                                                     ment handbook
                                                                                                   Opportunity and risk
 Group level                                                Sector level                                inventory
                                                                                                    Exceptional risk
                                                                                                        reporting                               Other
                             GfK integrated
                                                                                                                               (e.g. security standards,
                            opportunity and                                  Guidelines                                      integration concepts, etc.)
                           risk management
                                system


                                                         Company level

                                                                           9.2 Assessing opportunities and risks: details

                                                                           macro-economic: Despite the repercussions of the international
All principles, functions and processes of the GfK Group opportunity
                                                                           economic crisis on the macro-economy which are currently still hard
and risk management system are documented in a Group handbook
                                                                           to forecast, some experts expect a recovery in the global economy
to which all employees have access via the Group intranet, gfk4u.
                                                                           as early as the second half of 2009. This assessment is based on the
The core of this system is the annual opportunity and risk inventory       expansive monetary policy and economy programs in the main
carried out by the managing directors and Risk Management                  industrialized nations as well as weaker inflation due to lower energy
Coordinators, covering developments relating to risks identified in        prices. Sustained positive growth rates are also expected in Latin
the prior year and new risks that have emerged. Risks are assessed         America and China for example.
according to the probability of their occurrence and extent of
                                                                           The GfK Group operates worldwide and is highly diversified in
potential damage for two consecutive years, so that concrete
                                                                           terms of its client, market and product portfolios. Consequently,
measures can be specified to manage them. In addition, the
                                                                           even a worsening in the macro-economy would not mean any
individual Management Board members responsible for the
                                                                           significant acute risk to the Group. In addition, the stronger accent
sectors identify the potential opportunities in their respective
                                                                           on Asia and the Pacific as well as Latin America as growth regions
sectors. If the risk situation changes significantly or new risks arise
                                                                           gives GfK good opportunities for further positive development
during the year, ad hoc reporting measures ensure that the
                                                                           in the overall market despite the weaker economic position in the
Management Board of the GfK Group is informed immediately.
                                                                           traditional industrial states.
A uniform Group-wide reporting system based on standard
                                                                           Consequently, the GfK Group does not anticipate any significant
criteria guarantees that financial risks relating to current and
                                                                           risks arising from macro-economic developments which might lead
future business development trends are monitored and that
                                                                           to any major erosion in orders or sales and income at Group level.
any opportunities arising are highlighted. Based on the com-
mercial data provided by GfK companies, the Group Reporting                industry: The market research industry is unlikely to completely
and Business Insights departments produce monthly internal                 escape the unfavorable economic framework conditions. However,
reports which provide information on any potential risks to                in the past it has proven to be relatively crisis-proof
business performance at an early stage. Further forecasts and              and less susceptible to economic influences than other segments
budget projections during the year provide key indicators of               in the marketing and advertising industry. With its global network,
any imminent commercial risks.                                             the GfK Group is a full service provider offering a wide spectrum
                                                                           of surveys and analyses and is therefore well placed to meet the
                                                                           challenges posed by the impact of the financial crisis and intensi-
                                                                           fying competition.
Opportunity and risk position




Furthermore, the difficult economic situation does open up             In syndicated business, large-scale surveys are carried out
opportunities for international market research companies in           and offered to the market without any specific contract having
particular. For example, detailed analyses of the response and         been received. One of the risks is the high cost of preparing the
behavior of consumers in the crisis will become increasingly           surveys, when there are too few customers interested in buying the
important, as will information on the sales potential of products in   analyses. However, syndicated business is predominantly on offer
various countries. Through the fact-based consultancy approach         where the experience of the past shows that there is an assured
enshrined in its strategy, the GfK Group is already ideally            number of takers. At the same time, this business area offers high
positioned to meet the increased need for consulting services on       potential, since the smaller suppliers are not in a position to offer
the part of companies.                                                 such studies and each additional customer significantly increases
                                                                       the contribution margin.
sector opportunities and risks: Escalating concentration of
the client base due to mergers and acquisitions is affecting all       The impact of the international financial and economic crisis
three GfK sectors. There is increased competition for the              represents a challenge for the Custom Research sector, especially
marketing budgets of major companies, however, the dependency          in the Automotive and Financial Services segments, as efforts to
of the GfK Group on such major companies continues to remain           cut costs here will affect the companies’ market research budgets.
limited and in fact, the share of Group sales accounted for by the     National healthcare reforms, such as those in the usa, could mean
10 top clients changed only slightly from 12% in 2007 to 14% in        budget restrictions by the pharmaceutical industry. Greater use of
the reporting year.                                                    generic drugs is putting increasing pressure on the pharmaceutical
                                                                       manufacturers, which ultimately impacts on their market research
The risks relating to operational business are also only limited,
                                                                       budgets. The failure to obtain approvals from the Food and Drug
since none of the sectors generates more than 10% of Group
                                                                       Administration (fda) in the face of increased obstacles in light of
sales with a single client. The global presence of the GfK Group
                                                                       the more stringent political climate presents a continuing problem
further ensures that there is no substantial risk of any regional
                                                                       in the HealthCare segment.
dependency.
                                                                       However, GfK is well equipped to deal with these problems as
Despite the financial crisis, the level of bad debts is also
                                                                       well as the intensified competition resulting from the economic
insignificant in GfK’s broad-based client portfolio and the
                                                                       situation. Long-standing customer relationships and a comprehen-
liquidity position of the Group has not been detrimentally
                                                                       sive portfolio of products and services provide GfK with a solid
affected.
                                                                       foundation for success, as do its valuable databases, comprehen-
To optimize the income situation in all sectors on a permanent         sive household panels and high data quality.
basis, GfK launched the Group-wide biss efficiency program (see
                                                                       Global key account management has been developed further to
also section 11.7. Development of the GfK Group), which will
                                                                       respond to the requirements of major clients operating globally.
make a substantial contribution to GfK’s continued competitiveness.
                                                                       In addition, customer expectations are evolving further in the
The specific risks and opportunities in the individual GfK sectors     direction of the cross-sector services offered by the GfK Group
are discussed below.                                                   and the demand for online market research is continuing. Since
                                                                       GfK has been able to establish its online panels and techniques
The portfolio in the custom research sector comprises continually
                                                                       internationally at an early stage, the Group is well represented in
gathered data and ad hoc surveys tailored exclusively to individual
                                                                       this area. GfK’s online business benefits from the fact that clients
questions. In addition to the big, international groups, the ad hoc
                                                                       are increasingly focusing on the quality of the research work
segment is dominated by a large number of smaller, local providers.
                                                                       carried out. There are new opportunities arising in the HealthCare
This is due in part to the existence of market niches filled by
                                                                       segment, including in the field of medical devices and the wellness
smaller suppliers and in part to the fact that market entry barriers
                                                                       market which is continuing to boom.
are lower, since they require a comparatively lower level of
investment than continuous market research. Smaller market             In this market environment, GfK’s increasingly international
players frequently only cover a limited region or specialist           network is an advantage as international groups, and therefore the
segment, and are therefore more narrowly positioned in the             top clients in the sector, consider this global aspect to be one of
market. Potential loss of orders to competitors in these segments,     the key criteria when awarding contracts. The demand for market
for instance, because of a possible price advantage, presents a        research in emerging markets in particular is also continuing. By
risk here. This is countered by GfK with continuous analysis,          expanding its presence in these growth regions, especially in Asia
use of cost cutting potential and ongoing optimization of the range    and the Pacific as well as Latin America, GfK is consolidating its
of high quality, state-of-the-art products and methodologies on        reputation as a global player as well as generating additional
offer. A prime example here is the online portal, GfK Octopus,         business in local markets. Consequently, the further expansion of
which clients can use to download and analyze data from surveys        the Group’s presence is seen as the greatest opportunity for the
they have commissioned.                                                Custom Research sector. Transferring existing market research
                                                                       instruments to new countries also leverages synergetic effects.
An attractive and modern range of products and services will             The new GfK tc Score measuring technology enables tv viewing
enhance the loyalty of existing clients and attract new ones to          at a later time, e.g. via fixed disk or dvd recorder, to be recorded.
create fresh opportunities. In Austria for example, the successful       The development of the Evogenius international software platform
switchover to scanning as the recording methodology in the               represents a contemporary holistic instrument for the production
Consumer Tracking household panels led to improved data quality,         and analysis of media usage data. In the future, analysis will also
faster reporting and an increase in the product group spectrum.          include information on radio, print and online usage. The growing
This new technology will now be gradually rolled out in the GfK          interest in cross-media studies, which deliver information on the
companies in Central and Eastern Europe. The extension of                cross-media usage of a person combined with consumer and buyer
functionalities offered by the web-based evaluation software             data, also offers GfK additional opportunities.
Analyzeit also exploits the potential opportunity to enhance
                                                                         Delays arose during the development work on the reporting
customer loyalty. The GfK smart software solution which improves
                                                                         element of the Evogenius media software compared to the original
the research process for mystery shopping processes and increases
                                                                         project schedule. Negotiations were held with the main customer,
the quality of the evaluation is another example of innovative
                                                                         the German client on whose behalf the tv ratings are measured,
solutions in the Custom Research sector. The newly created position,
                                                                         to resolve the difficulties. As a result of these talks, GfK stopped
Global Head of Innovation, highlights the importance GfK attaches
                                                                         development of its own reporting software and in return, was
to this new issue as an opportunity factor, especially in the current
                                                                         granted the right to sell and use tv Scope, the client’s software,
economic environment.
                                                                         on an international basis.
GfK is the leading global provider in the retail and technology
                                                                         In recent years, the media market has been shaped by comprehen-
sector and is well positioned in terms of risk with regard to
                                                                         sive changes. New broadcast technologies, digitization and altered
dependency on major clients and data suppliers.
                                                                         tv audience behavior present particularly complex challenges to
GfK is distinguished above all by its global network based on an         the measurement of tv consumption. For instance, the mobile tv
uniform production and reporting system, as well as its own extensive    offering is constantly on the increase and here, GfK is already very
database. The StarTrack platform is a sophisticated tool through         well positioned, with a high level of potential for the future. GfK has
which GfK offers up-to-date services to its clients with global          responded to out-of-home viewing, for example at major events
operations. The consistently maintained technological edge in the        and in public places, with mobile data measurement systems, such
market, systematic expansion of the service spectrum and consistent      as MediaWatch, an electronic device integrated in a wristwatch
worldwide expansion are the strategic cornerstones used by the           which records the use of various media.
sector to exploit opportunities to further extend its market position.
                                                                         personnel risks: The developments in the economic environment
In addition to the increased expansion of Retail and Technology
                                                                         also affect the labor market. However as before, recruiting and
business activities in a number of African states, the sector’s
                                                                         retaining qualified staff remains one of the most important tasks for
position in the emerging markets is also being improved. The
                                                                         the GfK companies. GfK offers a varied qualification and further
acquisition of Shopping Brasil for example strengthened its market
                                                                         training program and is constantly working on optimizing its personnel
position in Latin America and the growing entertainment business
                                                                         structures in order to recruit, integrate and keep management and
activities were also expanded.
                                                                         specialist staff in the longer term. The findings from the Group-
For the future, increased reporting frequency, including in real         wide employee survey carried out for the first time in 2008 will also
time, where findings are delivered whilst data gathering is ongoing,     be used for this purpose.
also offers the sector further sales potential. The introduction of
                                                                         financial risks: GfK has covered its financial requirement with
StarTrack-Explorer in 2008 offering a global standard format and
                                                                         a syndicated bank facility comprising a fixed euro and us dollar
in-depth analysis, which clients can use to speedily create reports
                                                                         tranche and a variable revolving euro tranche. On the reporting
tailored to their individual requirements online for the first time,
                                                                         date, the fixed tranches equated to eur 79.2 million and usd 74.8
further increases client loyalty and improves the already excellent
                                                                         million respectively and around 74% of the revolving credit
competitive position of the sector.
                                                                         totaling eur 250 million had been drawn down at the financial
A significant number of sales recorded by the media sector               year-end. Under the terms of an agreement, the revolving credit
resulted from long-term fixed-volume contracts for continuous            line is available to GfK se until the end of October 2011. From
tv and radio audience research. The client relationships emerging        October 2011 to October 2012, the amount reduces to around
from such contracts offer a range of opportunities. On the other         eur 218 million. In addition to the syndicated credit line, GfK also
hand, the associated dependency on major clients also presents a         has bilateral credit lines amounting to around eur 58 million at
significant risk.                                                        its disposal, of which only a good 22% had been used by the
                                                                         year-end. In total, on the reporting date, the balance of remaining
The current difficult market environment, especially in the us print
                                                                         credit lines was eur 111.9 million (previous year: eur 165.3
segment, represents a challenge for the sector. Alongside intensified
                                                                         million).
customer services, this risk will be countered in particular through
the launch of new products in the market.
Opportunity and risk position




To further strengthen the finance base and extend the investor           interest rate hedging was reduced compared to the previous year
group, despite the difficult market conditions, GfK se issued            in order to take advantage of falling interest rates in the money
a eur 50 million loan note at the end of 2008. The loan note             market and to utilize expectations of a lower level in the capital
matures in November 2011 and the principal is repaid on maturity.        market for medium-term interest rate hedging.

The funding elements indicated and an existing cash holding of           As at the reporting date of December 31, 2008, the interest rate
around eur 37 million at the reporting date assure the sound             hedges had a positive fair value totaling eur 0.1 million. The
financial basis of the Group.                                            counterparty risk in connection with the positive fair value of all
                                                                         derivatives is regarded as low, since transactions are only con-
Overall, although the GfK Group expects higher margins will be
                                                                         ducted with reputable German and international banks. In addition,
payable to its lenders, it does not anticipate any adverse liquidity-
                                                                         the counterparty risk is reduced as transactions are spread across
related impact on its business from the financial market crisis.
                                                                         several banks.
foreign currency risk: As a global company, the GfK Group is
                                                                         legal risks: In many countries, such as Germany, the uk
exposed to transaction and currency translation risks.
                                                                         and France, the subject of apparent self-employment is still an
The transaction risk results from the sale and purchase of goods         issue. This harbors the risk that the interviewers and other
and services which are not paid for in the local currency of the         freelancers working for GfK could become liable for social security
respective GfK business unit. Based on the high proportion of local      contributions. GfK avoids additional costs by adjusting the
value creation of all GfK operating companies and the fact that they     employment terms to the respective national legislation as far as
generate sales and incur expenses in local currency, the currency-       possible.
related risk of the GfK Group is restricted. Group guidelines regulate
                                                                         The planned amendment of the German Data Protection Act would
that all GfK companies monitor their currency risks and hedge
                                                                         make telephone market research in Germany more difficult.
against currency fluctuations for projects over a certain size.
                                                                         Together with Arbeitskreis Deutscher Markt- und Sozialforschungs-
As a rule, GfK provides in-house financing in the local currency for     institute e.V. (adm), GfK has launched an initiative to exempt opinion
subsidiaries. The ensuing currency risks in the Group’s Treasury         and market research from the planned restrictions.
are hedged using derivatives. Hedging transactions usually run for
                                                                         GfK is involved in civil proceedings in a number of different
a maximum of 12 months. The offsetting effects of the underlying
                                                                         countries. However, the Management does not believe that these
transaction and the currency hedge are recognized in the income
                                                                         present any significant risks to the GfK Group.
statement and are consequently identifiable.
                                                                         risks ensuing from acquisitions: The acquisition of new
The currency translation risk is due to the fact that many GfK
                                                                         companies and their integration into the Group are associated with
companies are outside the eurozone, while GfK reports its
                                                                         risks. As part of its Excellence management training program, a
accounts in euro. In the consolidated financial statements, the
                                                                         tailored concept was developed which describes the sequence of
balance sheets and income statements of companies outside the
                                                                         measures required when integrating newly acquired companies
eurozone must be converted into euros. The translation-related
                                                                         and which clearly indicates the areas of responsibility. The
effects from changes in exchange rates are shown under equity
                                                                         participation of colleagues from the global GfK network ensures
in the GfK consolidated financial statements. As the participations
                                                                         compliance with all the requirements from an operating and
are generally of a long-term nature, GfK dispenses with hedging
                                                                         communications perspective.
directly for net assets. Instead, the Group tries to use natural
hedges to provide cover for participations. To do this, the financing    Legal and accounting due diligence, usually carried out with the
is in the currency of the respective company, so that the currency       support of experienced local teams of consultants, alternative
fluctuations are kept to a minimum. In order to eliminate volatility     valuation methods and clear business plans are the precondition
in the income statement relating to the reporting date valuation         for an acquisition. In most cases, the vendor’s management
of currency liabilities, GfK uses hedge accounting according to          remains with the company for several years as a minority share-
ifrs and valuation effects are reported under equity accordingly.        holder and/or director so as to ensure a clear motivation to assure
                                                                         the sustained success of the company.
interest rate risk: At GfK, interest rate risks mainly arise for
financial liabilities. In 2005, GfK used the favorable interest rate
conditions to finance the nop World acquisition and to safeguard
interest rates on a long-term basis and ensure greater accuracy
when calculating financing requirements. For this reason, as of the
reporting date, GfK se had hedged 56% of its financial liabilities
with interest rate swaps. The proportion of financial liabilities with
it and other risks: Installation, maintenance and further              high quality consulting opens up further opportunities to position
development of security measures to protect information systems        the company in the market, particularly in the current difficult
and the data they contain are essential for GfK. Precautionary         economic environment. The Group has also defined its future
measures serving to ensure the security of information technology      opportunities in the strategic 5 Star Initiative program launched in
and its applications have always been given the highest priority.      October 2005. The aims and objectives of this program continue to
                                                                       form the basis for the future activities of GfK.
The Group-wide security policy based on the recognized British
Standard 7799, adopted by the Management Board, was im-                The following table provides an overview of the key points relating
plemented worldwide in 2008 and specifies the mandatory it             to the risks and opportunities for the GfK Group:
security standards for the Group. In addition, the “moveit” project,
resolved by the Management Board as part of the Group-wide                                 Strengths                        Weaknesses
biss initiative, includes concentrating the global computing center    Internal factors     – broad, high quality and       – dependency on major
services in a small number of global locations as well as extending                           innovative portfolio of         customers
                                                                                              services and products
the Group-wide it standards. As a result all the security measures                                                          – heterogeneous structures
                                                                                            – fact-based consultancy          in regions on account of
and standards relevant to the Group will focus on these computing                                                             acquisitions
                                                                                            – high level of customer
center locations and any residual risks in it security will be                                loyalty
minimized.                                                                                  – international network

All the aforementioned measures as well as the it strategy of the                           – high level of staff know-
                                                                                              how
GfK Group and the Group-wide it security plans are coordinated
                                                                                           Opportunities                    Risks
by the Chief Information Officer (cio), who reports directly to
                                                                       External factors     – relatively crisis-resistant   – overall macro-economic
the ceo. Security issues are dealt with in cooperation with the                               market research sector          development difficult
it security specialists based in GfK companies in Germany and                               – increasing need for           – sustained concentration
abroad.                                                                                       information and advice on       on customers’ side
                                                                                              customers’ side
                                                                                                                            – fiercer competition
it audits also form an integral component of the audit conducted                            – demand for high quality
                                                                                                                            – changes in legislation and
by the Internal Audit department and are carried out locally by                               products
                                                                                                                              policy
it specialists.

GfK continuously assesses other risks beyond those relating            To summarize, it can be concluded that the overall risk position
to it as part of its disaster recovery plan.                           of the GfK Group continues to be assessed as low. No risks have
                                                                       currently been identified which might jeopardize the continued
Material risks relating to losses and liabilities are either covered
                                                                       existence of the GfK Group.
locally or by Group-wide umbrella insurances.

No substantial risks relating to research and development activities
                                                                       10. Major events since the end of the financial year
have currently been identified. GfK monitors the development
of large-scale, cost-intensive innovation projects by a system of      10.1 Changes in the GfK Network
regular reporting.
                                                                       The GfK Group expanded its network in North America at the start
No major it risks or other risks have currently been identified in     of 2009 with the acquisition of a majority holding in the American
the GfK Group.                                                         company Etilize and increase in its shareholding in DmrKynetec
                                                                       at the start of February 2009. Over the course of the year, GfK
                                                                       increased its holding in the French company ifr from 24.2% to
9.3 Assessing risks and opportunities: overall view
                                                                       100%.
Despite the downturn in the macro-economy, the risks of GfK are
limited and should not materially affect the net assets, financial
                                                                       Changes in the GfK network
position or result of operations of the Group. An overall assessment
                                                                                          Type of          Share changes
of the risk position of GfK also shows that no lasting threat to       Company            investment       in %              Sector         Region
business development is to be expected as a result of individual       Etilize            Majority         51                Retail and     North
risks or the interaction or accumulation of risks.                                        interest                           Technology     America
                                                                       DmrKynetec         Share            from 26 to 75     Custom         North Ame-
Potential opportunities for the GfK Group have been identified,                           increase                           Research       rica/Western
                                                                                                                                            Europe/Middle
particularly in relation to the further expansion of its global                                                                             East/Africa
network and the availability of an innovative product portfolio        ifr                Share            from 75.8 to 100 Retail and      Western
incorporating state-of-the-art technology which responds                                  increase                          Technology      Europe/Middle
                                                                                                                                            East/Africa
optimally to client needs. The core competence of reliable and
Outlook




10.2 Conversion of GfK ag to a Societas Europaea                                                      11. Outlook*
The conversion of GfK ag to a Societas Europaea, or European                                          11.1 Macro-economic situation: phase of uncertainty
Company, was completed on February 2, 2009. Through
                                                                                                      Experts expect a recession in the main industrialized countries.
this change in legal form, GfK is taking greater account of its
                                                                                                      However, it is not yet possible to precisely estimate how severe
increasingly international direction. An se is a supranational
                                                                                                      this recession will be because of the various economic programs
legal entity formed under European law, which corresponds to
                                                                                                      implemented by the countries and states. Moreover, it is still
the GfK Group’s understanding of itself and further underpins
                                                                                                      unclear how much bad debt or overvalued assets the financial
its international perspectives and structure.
                                                                                                      institutions still have on their books.
The se particularly promotes the further development of GfK’s
                                                                                                      Yet the International Monetary Fund (imf) is expecting a recovery
international corporate culture. This offers all employees and their
                                                                                                      in the global economy at the end of 2009. The reasons given for
representatives the chance of European involvement. In future,
                                                                                                      this are the economic programs in the key countries and lower
through their elected representatives on the se Employee Council,
                                                                                                      inflation due to the fall in energy prices. The latter is already having
all employees in the eu Member States and the European Economic
                                                                                                      a positive impact on private households and provides some
Area will be able to receive information direct from the management
                                                                                                      compensation for declining exports.
of GfK se and enter into a structured dialog on transnational issues.
At the centre of this dialog are the employees, as through their                                      Positive growth rates are still expected for China, India and other
motivation and commitment they make a lasting commitment to the                                       emerging countries, which could also push up the average for the
success of the company. Furthermore, the interests of all European                                    macro-economy.
employees covered by the scope of the agreement on employee
representation are represented on the Supervisory Board of GfK se.                                    11.2 Market research sector: crisis brings opportunities
This agreement is not only intended to lead to a structured                                           The market research sector has so far proved comparatively crisis-
dialog between GfK se and the European employee representatives                                       resistant in difficult times. International companies with a broad
but also international cooperation among the European employee                                        base, in particular, have the prerequisites for continual growth.
representatives themselves. The aim is to have a European                                             For example, in the adverse economic environment of 2008, the
dialog between the management of GfK se and the employee                                              GfK Group recorded organic growth in sales of 5.5%. A similar
representatives as well as the representative inclusion of the                                        trend was evident in the economic crisis of 2001. While global
European employees.                                                                                   growth stood at 2.4 %, the GfK Group achieved organic growth
From the date of registration of GfK se until the Annual General                                      of 6.1%.
Meeting on May 20, 2009, the following employees were appointed                                       2009 will be a difficult year and poses two challenges for the
as the employee representatives on the Supervisory Board: Dieter                                      market research sector. Alongside the repercussions of the
Wilbois, GfK ag, already a member of the Supervisory Board,                                           financial market and economic crisis that as yet cannot be clearly
Stephan Lindeman, Intomart GfK and Shani Orchard, GfK Retail                                          estimated, price pressure from customers is expected to intensify.
and Technology uk.
                                                                                                      In this environment, GfK is well positioned with its global presence
                                                                                                      and innovative products. GfK has a stable panel business and
10.3 Placement of loan note
                                                                                                      the access barriers for the competition are very high. In times of
In March 2009, GfK started the placement of a second loan note                                        uncertainty regarding the future recovery in consumer behavior,
amounting to a minimum of eur 50 million with a term of three                                         market research is essential.
years. In advance of the issue of the loan note, on March 9, 2009,
                                                                                                      It is to be assumed that in the wake of globalization, more and
GfK obtained bridging finance for the same amount until the end
                                                                                                      more clients will instruct market research companies to conduct
of the year at most from the lead bank.
                                                                                                      international market research projects. Producers in industrialized
                                                                                                      countries facing the threat of sales losses in 2009, and indeed the
                                                                                                      emerging markets as well, want to know more about their export
                                                                                                      countries. The spotlight is turning to the sales potential for the
                                                                                                      respective products in the various countries and the need for general
                                                                                                      information on the culture and particular nature of consumers
                                                                                                      in the respective sales markets is also becoming increasingly




*The outlook contains predictive statements on futures developments, which are based on current       or other uncertainties and unforeseen factors arise or the assumptions on which the statements
management assessments. Words such as “anticipate”, “assume”, “believe”, “estimate”, “expect”,        are based prove to be incorrect, actual income may vary considerably from the figures indicated
“intend”, “could/might”, “planned”, “projected”, “should”, “likely” and other such terms are state-   or implied in the statements results could materially differ from the results indicated or implied in
ments of a predictive nature. Such predictive statements contain comments on the anticipated          these statements. We do not guarantee that our predictive statements will prove to be correct.
development sales proceeds, income and personnel numbers for 2009. Such statements are subject        The predictive statements contained herein are based on the current Group structure and are
to risks and uncertainties, for example, economic effects such as exchange rate fluctuations and      made on the basis of the facts on the day of publication of the present document. We do not intend
changes in interest rates. Some uncertainties and other unforeseen factors which might affect         nor accept any obligation to update predictive statements on an ongoing basis.
ability to achieve targets are described under “risk position” in the Management Report. If these
important. Alongside this qualitative, ethnographic information,         11.3 Research and development: ahead of the market
comparability of the results of multi-country studies is also
                                                                         The GfK Group will also increase the benefit for clients through
becoming important. Cost-saving products and marketing plans
                                                                         relevant innovations in 2009. To do this, the Group works closely
that are to be successful in more than one market can only be
                                                                         with the basic research of GfK-Nürnberg e.V. Work currently
created with comparable data. This requires international expertise
                                                                         underway includes a cooperation with the University of Geneva
and a global presence on the part of the market research organi-
                                                                         and Fraunhofer-Institut to examine whether it is possible to
zations concerned. Increasing competition here will crowd
                                                                         automatically identify emotions using software-supported analysis
out smaller market research companies. This in turn opens up
                                                                         of test person videos.
opportunities for international companies, so the crisis brings with
it new chances. Consumers are reacting to the changing world and
the demand for market research information will rise long term.          Custom Research

Moreover, GfK has a good financial base, a solid foundation and a        There are plans to carry out a study together with the Hartman
clear corporate strategy. A high degree of flexibility allows GfK to     Group in Seattle to analyze the influence of the global economic
respond appropriately to changing market conditions.                     crisis on buying habits and customers’ perception of their
                                                                         purchasing power. This study forms the basis for further discus-
More than ever, it is important to know how communications
                                                                         sions with brand manufacturers and retailers on new, innovative
works, how products and services need to be designed and which
                                                                         approaches to categorizing the experiences of consumers.
innovations will be successful. The trend shows that clients are
becoming more demanding and the depth of analysis is increasing,         In cooperation with market research company tns, GfK will look
for example through complex multivariate procedures which assess         in depth at the behavior of consumers during the economic crisis
the interplay of various variables. Only companies with a high level     via the Europanel. The corresponding basic research studies will
of expertise in methodology and highly qualified employees can           be carried out in the household panels.
meet these requirements.
                                                                         In the United States, GfK HealthCare will primarily concentrate
As a research field, customer satisfaction and loyalty surveys will      in 2009 on further improving existing products. This includes, for
gain in importance, especially in markets with fierce competition.       example, Therapeutic Class Studies (multi-client studies), Detail
In saturated markets, it is more cost-effective to retain existing       Tracker (advertising impact research) as well as the establish-
customers than to go through the costly business of attracting           ment of centers of competence for diabetes, managed care and
new ones. Integrating this survey data in Customer Relationship          immunology and biological preparations. An important component
Management systems and the systematic use of all information to          of these research initiatives will be the option of carrying out
improve customer relationships is a service increasingly provided        regular tracking studies.
by market research consultancy companies.

Another emerging trend is that customers increasingly want the           Retail and Technology
results of their surveys in realtime, but with top quality at the same
                                                                         GfK launched a new panel for mobile phones in Iraq. The first
time; a requirement that is most closely met by online research.
                                                                         results are expected in April. The sector is also driving forward the
Use of the Internet is so widespread in most industrial and
                                                                         establishment of panels in Africa and panel starts for consumer
emerging countries that reaching the target group is hardly a
                                                                         electronics and electrical household appliances are expected this
problem any more. Online research is the market research
                                                                         year in the Ivory Coast, Kenya, Mozambique, Nigeria, Tunisia,
procedure offering the greatest growth potential due to its speed,
                                                                         Algeria, Uganda and Tanzania.
comparatively low cost and ease of reaching the target group.

Yet the Internet will not only continue to gain ground as a survey
                                                                         Media
platform, but is also becoming increasingly important as a source
of information for companies. It is the task of market research to       Development activities in the Media sector are concentrated at
offer companies the instruments they need to analyze the commu-          GfK Telecontrol, the sector’s center of technical competence. Here
nications of customers in forums and blogs.                              work continues on further optimization of measurement systems
                                                                         for future-proof electronic tv and radio research.
At a qualitative and quantitative level, hybrid procedures, i.e.
looking at the issue being surveyed using at least two different
methods, are likely to become more important. On the quanti-             11.4 Human Resources: focus on internationalization
tative side, this poses the challenge of having to merge data
                                                                         The internationalization of the Human Resources department
from different sources, which in turn is likely to be feasible only
                                                                         started successfully in 2008 and will be continued in 2009. The
for those market research companies that possess outstanding
                                                                         central tasks for 2009 are the introduction of global succession
methodology expertise.
                                                                         management, wider dissemination of hr methods via a centralized
                                                                         system for personnel processes as well as greater support for the
                                                                         local Human Resources departments to reduce the staff turnover
                                                                         rate.
Outlook




11.5 Corporate Communications and Marketing: spotlight on                objective, the Full Service initiative, GfK intends to continue to
     promising technologies                                              position itself as a full service market research company. Under the
                                                                         fifth initiative, Outstanding Financial Position, GfK is aiming in
To meet the needs of a global communications strategy, the
                                                                         the medium term for sales of eur 1.5 billion and includes plans for
GfK Group is increasingly using innovative, digital technologies.
                                                                         further acquisitions, especially in the growth regions Central and
In 2009, this trend will be further intensified within the constantly
                                                                         Eastern Europe, Latin America and Asia and the Pacific. In addition,
growing corporate group. Work was progressed in 2008 on the
                                                                         the Group aims to achieve an income margin (adjusted operating
development of a mobile website that went online in January 2009.
                                                                         income in relation to sales) in the range of 13% to 15%.
The content of the GfK website was reworked to make it accessible
using mobile devices. Among the global full service organizations
in the market research industry, GfK is a pioneer in this field.         biss efficiency program
In addition to further expanding its worldwide coordinated press
                                                                         To optimize income on a long-term basis and in all sectors, the
activities, Corporate Communications will also be updating the
                                                                         GfK launched the Group-wide biss efficiency program. The
visual GfK world and strengthening the presence of the company
                                                                         program was launched in 2008 and will accompany the GfK Group
in the international marketplace.
                                                                         until 2011.

                                                                         Various projects are pooled under biss, which can be divided into
11.6 Investments and finance: network expansion and
                                                                         four main categories Business, it-Services, Streamline Services
     debt reduction
                                                                         and Synergies. The first category (Business) aims to achieve
Authorized capital, free capital lines as well as positive cash flow     organic growth from new technologies/services and their
development provide the GfK Group with sufficient equity and             international roll-out.
outside capital.
                                                                         The second category (it-Services) focuses on the consolidation
The GfK Group will again use a large portion of the free cash flow       of the it infrastructure with regard to cost reduction and
to expand its own network and reduce debts in 2009. Furthermore,         quality improvements. Here the “moveit” project includes
the Group will continue to invest in new measurement technologies        concentration on the global computing center services at global
and panels.                                                              computing center locations as well as an expansion of Group-wide
                                                                         it standards.
In the current financial year, the GfK Group is planning to carry
out maintenance and replacement expenditure of around 4%                 The Streamline Services department focuses on efficiency increases
of planned sales, which corresponds to the previous year’s level.        through the amalgamation of locations and structures. Synergies
                                                                         comprise measures resulting from the identification of potential
The current financial and economic crisis is not likely to have a
                                                                         from various selected cost types.
significant impact on financing at GfK. Through its longer-term
financing under the syndicated credit facility which runs until          biss will make a considerable contribution to maintaining GfK’s
2012, as well as the recent issue of the loan note, GfK has a            competitiveness on a permanent basis. The program is set to
balanced credit portfolio. Interest rate risks are also hedged           produce annual income increases of at least eur 30 million and its
through interest rate hedges.                                            effects will be felt in full as of 2012. Of this increase, 30% will
                                                                         already be achieved in 2009, a total of 60% in 2010 and around
                                                                         90% in 2011.
11.7 Development of the GfK Group: aiming to increase sales
     and income                                                          In the period 2009 to 2011, project expenses of around eur 40
                                                                         million are expected in order to achieve the income improvement.
5 Star Initiative
                                                                         These project expenses will be incurred as follows: 30% in 2009,
GfK will continue to pursue the aims and objectives under the            35% in 2010 and 35% in 2011.
5 Star Initiative in 2009. The first Fact-based Consultancy initiative
                                                                         Of this eur 40 million, around eur 11 million will be reported as
concerns the consistent establishment of a service package of high
                                                                         highlighted items between 2009 and 2011. 40% will be allocated
quality, fact-based and continuous consultancy services for the
                                                                         to 2009, 25% to 2010 and 35% to 2011.
client’s top management. The second objective, top 3, enshrines
GfK’s vision for its positioning in the global market for market         Overall, the biss efficiency improvement program should therefore
research. GfK aims to be the number 3 in the industry and at the         already have a positive impact on ebit and adjusted operating
same time the number 3 in every major market research country in         income in 2009.
Europe, America and Asia and Pacific as well as in each of its three
sectors. The third objective relates to the Global Reach initiative
under which GfK aims to further expand its global network and
establish its own companies in all relevant countries. With its fourth
Outlook and order intake                                               Nuremberg, March 12, 2009

Against the backdrop of the current economic environment and
persistent downturn in framework conditions, the GfK Group
is still aiming to achieve organic growth in sales in financial
year 2009 and will implement measures to maintain the margin                          Prof. Dr. Klaus L. Wübbenhorst
at the previous year’s level.

The management assumes that the start to financial year 2009 will
be considerably more restrained than 2008 and that the pace of
growth in sales and income will not pick up until the second half
                                                                                       Christian Weller von Ahlefeld
of the year. The effects of the biss efficiency program will also
become more evident then.

As expected, the GfK Group was unable to fully escape the
downturn in the economic environment at the start of 2009
and the order intake in the new financial year has been slower.                               Petra Heinlein
As at the end of February 2009, the order book covers a total
of 39.4% of the expected annual sales (previous year: 42.2 %).
Traditionally however, the first two months are not an indicatior
of business development for the full financial year.
                                                                                            Dr. Gérard Hermet
GfK anticipates that the highlighted items will be in the range
of eur 27 million to eur 32 million (including biss) (previous year:
eur 32.0 million excluding the effects of the ubm settlement).

income from participations is expected to match the previous
year.                                                                                        Debra A. Pruent
net financial expenses are set to stand at around eur 20
million.

In total, GfK aims to achieve a group tax ratio of approximately
30%.                                                                                       Wilhelm R. Wessels
Although the GfK Group cannot estimate how the economy will
develop in the longer term, the Management Board assumes
that the market research sector will return to its growth course in
the coming years. As a result of its very good competitive position,
the GfK Group aims to outperform the market research sector
in terms of organic growth in the medium term as well. The
consistent alignment with and implementation of the 5 Star
Initiative will continue to determine the actions and objectives of
the GfK Group in the future.

								
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